A company that started 25 years ago believes that its best is yet to come.
Yeah, it's kind of surreal. And even when I saw Young Turks 25 years, I told you the same thing. I said, 'My god, we've come a long way.' When you look back, I mean it doesn't feel like 25. I think life in the internet industry is life in the fast lane. Till 6 months before the IPO we weren't even planning an IPO. It was Sanjiv Bikhchandani who was an independent on our board who said IPO, who told us on a January board meeting that guys you are ready to IPO. We said what are you talking about? He said, '3 years ago, we were at the same level and you guys are growing faster.'
What's the most unusual celebration case that you've seen?
I believe they're now breakup and turning single again parties. Break up and turning single again. Their parties and get togethers like, listen now guess what, we're all single, we party. But all kinds of stuff is happening as we know, like proposal economy is happening. Yeah. People now, youngsters are choosing exotic locations to go make a proposal and they actually travel. So for the last few quarters we see our frequent travelers are actually taking more trips than they were ever before. Right? It's a combination of short-term locations and we've seen trends like the YOLO phenomenon is here to stay and Gen Z and it's real and Gen Z.
25 years ago a young man called Deep Kalra decided that he wanted to get into the online travel business. 25 years later, MakeMyTrip is one of India's leading travel companies and has seen a record-breaking 2324. Here's the MakeMyTrip story over the last 25 years in numbers. 80 million plus lifetime transacted customers, 490 million plus app downloads, 519 million shopper visits. That tells you the story of MakeMyTrip over the last 25 years. In 2010, they decided to list on the NASDAQ. They've seen a flurry of acquisitions through the course of their journey, and there's been plenty of learnings, plenty of setbacks, but it's been an exhilarating ride. Joining us now to talk about the story, the last 25 years, but more importantly, the next 25, is Deep Kalra and Rajesh Magow. Deep, Rajesh, many many thanks for joining us. Deep, let me go back 25 years. So much has changed. So many low points in the course of your journey. On many occasions, it was almost a question of will you be able to make it through. But you have and you survived and you're here to tell the tale.
Yeah, it's kind of surreal. And even when I saw Young Turks 25 years, I told you the same thing. I said, 'My god, we've come a long way.' And when you look back, I mean, it doesn't feel like 25. I think life in the internet industry is life in the fast lane. So it moves so fast. I mean you can look back and typically I think somehow it's waves of five years for us has been that kind of story. So first five years were all about I think just survival. Yeah. And you know making sure that we live to see another day. At least three of those five years were really dark. But when I look back the best years because that's when really a germ of an idea became proof of concept, became a business, started making money, the team was together and we were really there was a shared common passion dream and then it actually was happening despite all the odds. So I think that was a great period and 2005 to 2010 was just this ferocious run to IPO. Yeah.
And till six months before the IPO, we weren't even planning an IPO. It was Sanjiv Bikhchandani who was an independent on our board. Who said IPO? Who told us on a January board meeting that guys you are ready to IPO. We said what are you talking about? He's saying yeah 3 years ago we were at the same level and you guys are growing faster. You were growing 50% you should IPO. And this is a man who didn't know whether the NASDAQ were in pat or well this is a man who knew a lot actually and still those but he told us and we took it very seriously we were surprised at the meeting. Rajesh was CFO then and we put our heads together and he called a meeting and I think for the next 6 months he and the auditors and the lawyers they just pitched tent in office and in 6 months we had IPOed. August 2010 we IPOed on NASDAQ being one of the first internet companies from India to IPO there, first travel company from India to IPO there and it was great.
And then I think from 2010 to probably right up to COVID was overall a really good run. Some hiccups of course when Kingfisher went down it kind of challenged the whole domestic air industry. We were very domestic air dependent. We started building out a hotel business in right earnest but it was a pretty good run till then. And we had a huge acquisition. We acquired Goibibo and redBus at that time. Learned a lot about how to assimilate large acquisitions and then COVID. So I'm just giving you the short version and I think COVID all over again was truly I won't say near death for the company, but it was a complete reset because our business went down. We reported a quarter we were 96% down on revenues and it was crazy because you know no one this was national lockdown of course and to come back after that to restructure cost space as much as you can obviously COVID had to lift but the way travel has come back we all know you can't get a room you can't get a seat everything is double the price but people have I think in their minds have said yeah like listen if I have a bucket list I'm going to take it off now. I think we as a company came back stronger, longer because we went about restructuring cost in a very serious way like we said okay fixed cost wherever we can reduce we should. Some of the toughest decisions ever were taken which is yes we had to let go of almost 10% staff which was very hard, have tried to take many of them back as things have got better but I think we came out much stronger, definitely stronger than industry and as crazy as it sounds I think our last year has definitely by all measures been our best year ever.
Over the last few years, we've seen growth and profitability both come together. The holy grail of the internet world we probably I think that's what couple of VCs had reported. We probably make more EBITDA, more profits than any other internet company in India which is a great you know it feels really good and it's a biggish company now. So when you look at the number of people and all it's a little scary but you know knock on wood couldn't have asked for a better 25 year old 25 years script.
And an appropriate sort of 25 year gift is the fact that you're as you said you've reported your best numbers ever. 46 million in quarterly profit, that's your best performance. 11 billion in market capitalization. So it's been quite a run. But Rajesh, before I get to the numbers, I want to actually talk about how you and Deep got started, your exit and then your return to MakeMyTrip because that's also an incredible story and it's really part of what keeps MakeMyTrip going.
Yeah. No, absolutely. You should share that.
No, I know and that's a very very interesting story and I guess Deep likes to put it always saying maybe it was destined to be like that. So here it is the way it started. You know I joined and Deep was looking for a founding team at that point in time which is Deep's idea set it up in 2000 and I approached him, we had a meeting, really long meeting, and I think I was in that meeting decided that you know Deep and I should work together, I should rather work to work with Deep because the way the whole meeting happened, the way the whole conversation happened, one of course the new age startup idea was an interesting idea and I was getting ready to get into a new age startup because I had the corporate experience behind me. I had worked with a tech for about 5 years after that. It was actually an AT&T startup that I worked for about a year, was a bit of a dry run for me just to get into a full-fledged startup. I was getting ready for that. So those two things happened. But here's the most interesting part that happened. So, you know, after I said yes, I'm ready to come and work with you. And Deep explained it to me, you know, MakeMyTrip, here's the idea and we've raised some money. We've got some money. We've got like a million dollar already, but we'll get another tranche of another million dollar because there was the $2 million that was raised, which I promised you was our promise from RBC. Yeah, it was the promise from they backed out. And then it so happened one month down the line the circumstances changed and Deep called me once and I remember I was in the car I was driving I parked my car near the Taj hotel I think I was just coming from work and Deep said in all his honesty and transparency he said I have to share an update with you. I said what's happening. So he said you know I told you there's going to be some more money coming in because the developments had happened by and they're backing out and we won't get that money. I just wanted to let you know and I don't know whether you quit from your previous job or not. But it is only fair for me to share this update because this is the new development is very different from what we had spoken about. And the second thing, so therefore I wanted to actually give you an opportunity. So you think about it, I wanted to let you know this information. And to be honest, I told that to Deep at that point in time because it actually further sealed it for me and I'm saying here's a man who's actually coming back who would have cared and see Rajesh has just agreed to join and he's coming on board and joining. Who would have cared to call and said is the development we may not have money because when I actually joined Deep was in the US trying to actually look for more money and we had only one month money, literally one month money at that point in time. And I said to Deep, I said don't worry about it, I have actually quit already but even if I had not I had made up my mind and you know we'll sink or swim together. I remember those words so clearly, we'll sink or swim together. Yeah.
So because I was ready for it. I mean you know so it was just a matter of clicking sometimes right you know so you like a particular person and saying work we'll figure something out right. I mean you know we go there because that is what we have to in any case it was supposed to be 1 million is nothing right I mean it just gets you going and at that time it was 48 rupees so 1 million was actually much less, it was barely 5 crores then it was small money right. I mean you know you're not going to build long-term sustainable business with that small money so in any case it was going to be first job that I had was to start looking for more money. So anyway, this is how it started and then you know because we before we actually really started we realized that India wasn't really ready right so then not only the money was the issue but the other development that happened and the product market fit was not there, India's internet ecosystem did not exist at that point in time so we were definitely pre-sunrise at that point in time. So then we were wondering about you know what to do. So I think the better sense prevailed and we said I don't think we can launch in India you know so that pullback happened and then the niche was sort of NRI audience and then we started and then ebookers from UK and that's the other part and that's why when I went on the other side and came back later on but that ebookers actually deal happened because of the circumstances because they came in and they said that they wanted to set up an India unit. So they were looking for management team, they're looking for domain expertise and they found that in us, ready unit and ready made unit right. So you know so few people so Deep and I were doing sort of joint for a while and then I moved on the other side and we got some money out of it and MakeMyTrip got stock money and cash, it was a cash and stock deal that happened. It was a JV solution.
We were on life support. Yeah. And so we had that arrangement and that listen someone needed to be there. They wanted DHA wanted both of us there and I said that's really hard because MakeMyTrip is my baby but Rajesh will run it and I'll also be overseeing and all of that jazz but that was our arrangement that you know we and we needed so it was a build operate transfer, we got fees which kept our fires burning and I think the big lesson there is that you pretty much do anything and everything whatever it takes, whatever it takes within the realm of obviously staying honest and staying straight. If you believe in something you find a way and that's when I look back and I tell young entrepreneurs even today just don't give up too early.
What you said and I want to get both of you to comment on that. You said you know sometimes people give up too early and your advice to entrepreneurs, young entrepreneurs who are watching this program at this point in time is don't give up too early. But what does it take to find that kind of resilience, to build the courage, to have the conviction to say I'm on life support but I ain't giving up?
Yeah. I think it's a couple of things and now I've thought about this a lot because all hindsight is obviously 2020. I think the first is complete conviction in your idea, what you're trying to do. Not necessarily how you're trying to do it. You can be flexible on the how because technologies change, things change but what you're building, what this solution is, is it indeed best-in-class, best in India today, best in world tomorrow, is it something where you can take on anyone because you've got a great product because your back-end technology is smarter, faster, more efficient, because you found a customer insight which no one else knows. So you have to have conviction in that. If you're iffy about it and you're like, 'Yeah, maybe whatever sort of.' Then it's not for you. The second ingredient is definitely the team. Whether they're co-founders or the founding team doesn't really matter. These are people who've got to share your vision and your belief and actually add to it by questioning and debating and making that thing sharper and better, saying okay listen this is our proposition. This is what I thought but I have these two three people around me who are constantly questioning and maybe making that proposition even sharper but also believed. And the third is while the numbers will tell you where you're going. Yeah. So we are definitely creatures of numbers, both Rajesh and I, at the end of the day in numbers we trust because it'll tell you where your conversion metrics are going, your whole funnel, is it getting healthier, is it getting better at a micro level, even incremental changes on a week-by-week basis means you're moving in the right direction. You just have to bridge a gap. And the X factor is I think that's the gut, that's what an entrepreneur will know, it's your gut instinct.
Listen, you know, let's not give right now. Let's push it. And I want to know through some of those hard moments and there's been plenty as Deep has just spoken to us about, what makes you decide okay you know as you said in some cases you feel let's give it another shot but in some cases you probably think that we've done enough, we need to pull back. The decision to pull back, if you can give us some examples of when you've had to do that and when you believe that that's the right time or the right thing to do.
Yeah. No absolutely. I'll tell you one or two examples of that but before I do that there is one more thing that I wanted to add to what Deep was saying. You know just about how do you sort of build resilience or how do you sort of go through the whole process. I think it, you know, before you actually jump and start your business or become an entrepreneur, I think it's also about making that choice very seriously because it's not a non-serious thing, it's not a and it's not for everyone. It's not for everyone, it's not a fashionable thing to do. There are millions of choices today that you have. But if you are just getting carried away because your friend was just doing a startup and I have to do it and he created X amount of wealth and if that is the motivation, 100th unicorn or the 101st unicorn, if that is the motivation, don't do it because see unless you really take that process seriously because I think that is where the conviction, the start of the journey of the conviction actually starts from there if you ask me because then you have thought through that there is going to be a really long journey.
I think that's just a phenomenal point. You're so right about this whole mindset, saying I'm not getting in because I'm not chasing just big bucks to make money. You can probably if you do the risk-reward curve, you look at the math, you're better off probably if you have a good job you can keep going, you'll make probably the chances are you'll do better.
No, but in 2000 when you actually decided to start up and you had a good job, you know, you since Stevens, I am Ahmedabad, good college, yes I had a very good college, you know, cushy corporate job, I quit GE Capital and he quit a good job actually, most of our people had were doing well. So but back then did you think that you know did you have the marathon mentality back then? No, I'd be lying if I said that the reason I actually wanted to build what we call MakeMyTrip today, an online travel platform or an online stocking platform was the other idea but was because I didn't see a large company being able to really crack the internet. So for me the pull was the internet was happening and I wanted to build something on the internet. Oh and by the way that means I have to be an entrepreneur. But it changed as one went along and I think one just grows into it and you either like this and you're quite comfortable giving up some stuff and sacrifices on the monetary side. So, it's deferred gratification too which may never come but there's great satisfaction.
You're talking about deferred gratification. We're living in an era where everything is YouTube shorts, Instagram reels, 10-minute delivery. I mean, you know, what are we talking about? The fulfillment expectation has changed completely. So as someone who's starting up today, this idea of deferred gratification that Deep is talking about, Rajesh, do you believe that you know it's going to resonate?
Yeah but before that I think we should talk about the pull back example because that's also very very important as part of the entrepreneurial journey. So I'll give you one very interesting example. You know we went IPO on the back of flights business only and that was in 2010. We were like $40 million top line there looking at about 60 million, 90% of our business was flight business only and maybe the habit changing happened fast and then you know we got to that kind of scale in that flight business but that flight business was a low margin business and you know it was not necessarily going to be the only product or service that we would offer right. So as part of our strategy was very clear that we had to build other businesses. Now one of those businesses happened to be hotel business, the hotel booking business, and there the journey, the actually the hardest business for us to actually build over the years, which took the longest, was actually the hotel business. Really why? And the reason for that was landscape, you know it wasn't one dimensional product and there were multiple problems there. One was the supply side landscape was hugely fragmented, yes you know we didn't have, I mean unlike US you don't have chains here even you know today there about 20% of the inventory is chain hotels right, so 80% is all fragmented supply and there was hardly any technology on that side, like it was not digitized, none of that was there at that point in time. And the other even bigger problem was the consumer habit. Now in India perhaps the only country where people would actually go to the hill station, walk to the three or four hotels and then decide which one to book, like literally physically see that. So now both sides and we thought because internet gives you reach, you know, and then start investing and we had put together some sort of a product or maybe a 1.0 product for hotels, went ballistic on marketing and stuff like that and we realized nothing was happening right. So we had to pull back and we said no we are not ready right.
And this like started, I mean we've been trying to build hotel business actually even prior to IPO around 2009 because you know when we were going to the market in the US especially US and it was an evolved market and they all knew that you know on the back of flight business it's not going to be the OTA that we would like, it has to have at least a lot more in line of sight to building hotel business and the other businesses. So we started building that but India wasn't really ready. It was really really hard for us to build. So the learning there was that you don't necessarily need to get carried away because just because internet gives you inherent reach right, so and therefore just go ahead and overinvest in marketing dollars like you know try to get customers in. I mean you'll get traffic but you know they would not convert. What's the point? Yeah, right. So then go back to the drawing board, invest in the right areas. So we had to do huge amount of heavy lifting on the partner ecosystem. Correct. To give them the build technology for them to get the inventory on our platform brick by brick. Literally have had feet on the ground to actually go and educate, meet, contract hotels literally like you know that was the way. Internet company but if there is one business development on ground workforce that we have is actually hotel business development right even till today, which has become the moat, right, has become the real differentiator. So I think that's a good example of where to stop and not necessarily end up investing in the wrong areas.
As we look at what's happening in the industry today, different sectors, not just travel but outside of that as well, do you believe that consolidation is going to force the sanity that Rajesh was talking about? I mean that's exactly why the Goibibo-MakeMyTrip deal happened because you were being forced to burn through cash because that is what the competition was doing at that point in time. So buying out competition, consolidation, do you believe that is where we're at in many sectors at this point in time in the internet business in India?
It's a great question and I don't think it's a silver bullet and maybe the only solution. It's case to case. So Rajesh called it out very well that listen a private company funded 100% by Naspers now Prosus with one playbook. They were very clear and it worked out for them that listen we will spend a lot of money but we'll force the hand of the market leader to either buy us out or buy us out basically. That was their game plan. Yeah. So we paid a price and probably it worked out well for them. They were shareholders of ours for a while and very canny, very very smart shareholders. But I think it's sector to sector.
So now if you look at some of our sectors, if you have it's a duopoly by and large but you have both listed companies whether in India or overseas then you have the fiscal prudence or the discipline that Rajesh mentioned. So then you are competing in a very smart manner, different manner. It's happening all over. By the internet, you know, look offline. I mean, look at traditional businesses. So, if you look at soft drink beverages, we've had a duopoly forever in most markets. You'll have some local player, but by and large in India it's a duopoly. Yeah, kind of sort of. What do you mean kind of sort of, isn't it? No, there are four good airline companies in India, but yeah, I think obviously Indigo right now is just doing phenomenally well and they're a great airline. But I do believe Air India will eventually get their act together and also catch up and then I think Akasa has some very very good building blocks. SpiceJet is clearly the fighter, if there's resilience in the airline sector then that's SpiceJet you know. So I guess that is a tough market. But in markets in just the e-commerce sector, if you look at food delivery, kind of duopoly pretty much controlling that. If you look at cab hailing, kind of duopoly again. So I think in some cases and that's where also there's a whole monopolistic angle and everything else but that's not the only answer. So again it just depends which stage of evolution of that market you're in. If it's a mature market already then you would compete. But I think the key point what Rajesh was making is if your unit economics are not getting better on a trend basis then you're never going to build a real business. Then it's just a question of how much money do you have to burn? I think that era by and large is over. I think it's over because the free cash is over. Yeah. Also businesses have reached that scale. Now you could have waves where people will say now guess what? We're going to invest a lot in AI. We're going to do you know model that's people investing in building models which sadly is not really happening in India. It's happening largely in the US and China. That is research spend which is going on. But you'll have crazy valuations. But I see a lot more sanity in the markets today and which is good. I also see much savvier and smarter entrepreneurs today. I think the new crop of entrepreneurs is definitely smarter and savvier than we were.
Well, I think they've had your experience to learn from and the market has evolved and matured as well. But you know, Rajesh, we're talking about the choices made over the last 25 years. But let's talk about the road ahead as well. I mean the market has changed, the competitive landscape is different, technology is completely different. The Indian consumer is far more savvy, does have a little bit more discretionary income to play with at this point in time. What do the next 25 years look like when you say the best is yet to come? Capture that for me.
Next 25 years for all businesses including us and I'll tell you specifically what is happening for travel as well is going to be driven by this fundamental macro story that India's outlook is, as you can see from all these metrics now, so what does it mean for travel business specifically and there what is also happening and maybe it is thanks to COVID what happened because you know people saw those difficult times from very very close right. If you really look at any surveys and by the way a global phenomenon, so if you ask a question and we've looked at many of them, if you ask a question where would you want to spend your lion share of your disposable income at your disposal, travel is right up there. And then the next one is entertainment and experience and so on. The possessions are going down, the material possessions in terms of all the gadgets and the products are actually going down. People want to spend more money. So behavior reset, the behavior reset is happening, right? So the consumer habit is changing behavior and we see that from our own data for the last few quarters. We see our frequent travelers are actually taking more trips than they were ever before, right? It's a combination of short-term vacations and we've seen trends like the YOLO phenomenon is here to stay and Gen Z and it's real and Gen Z and the rent-renter economy, people don't want to really buy, they don't want to own assets, they just want to be light-footed.
And this is people like not much younger. I have a brother who's 40 years old, doing very well, lawyer, his own firm, doesn't own a house, doesn't want to own a house and he's very clear about it, this is a complete waste. Absolutely. And the new use cases, the celebration use cases, not only the younger population and people who are going to office, they are not necessarily celebrate everything. I mean you have to have an excuse to celebrate and get into. What's the most unusual celebration case that you've seen? Well, you know festival is one of them, or I actually just unusual one is just a long weekend and I just want to get into it, there's no occasion, there's no anniversary, there's no birthday, there's a get together, you know, have full flexibility of music and late night. And I believe they're now breakup and turning single again parties. Break up and turning single again. Again, their parties and get togethers like, listen now guess what, we're all single, we party. But all kinds of stuff is happening as we know, like proposal economy is happening. Yeah. People now youngsters are choosing exotic locations to go make a proposal and they actually travel to that. Like this is the kids generation clearly. I know people who have chosen Morocco recently and they made a proposal in the Sahara desert and these are Indians. So they're traveling all over the world to make proposals. So imagine what will happen when the marriage and everything else goes. I think it's become a celebration also. Everyone's coming to the conclusion listen the most valuable thing we have is time. It's the only resource that's finite and you can't take it for granted. Yeah. And live it up. Enjoy. If you have everything else then make those moments count and create memories. So I think all of that comes together in the travel which is great news for your business.
Great news for us. Absolutely great news. Absolutely.
Absolutely. And all of this is coming together almost like a perfect storm. So now when you start looking at hindsight from here on then there would be sometimes you would feel that you should be you know maybe 10 years younger, maybe we would have gone public much later and so on and so forth. But no regrets for the journey, it's been actually pretty satisfying every which way that you look at it because of the fact that eventually it sort of played out and the best part for us has always been at MakeMyTrip when you see all stakeholders getting benefit, like those are the high points for us. Like when we IPOed, the high point was not necessarily achieving that milestone to be honest because at the end of the day it's a project for the organization. It was more that the 80% of the stockholders got benefited out of it, right? You know people, employees, absolutely. And a lot of those actually didn't even believe in that. 75% of the team had held stock, like we had made sure they'll get some stock, so it was a big deal for everyone. Everyone wanted to come to New York including those who had taken a pay cut and then they were so, they were in serious, they were co-founders, they were there, including a guy who was our office boy turned runner, never learned computers but one of the biggest loyalists we have, Arif Khan, and you know we had given him stock and he's bought two or three different houses now in his old town in Noida from that and he's still with us.
So before we started you were saying, well, there from the original team...
Actually probably if you look at the first few years probably even 20 but are there yeah quite a few people are still around that's not bad that's half of the original team the others are very friends and still yeah.
Very and there have been stories, Shane, believe it or not.
I mean I remember those moments because when IPO happened they suddenly started going back to their records and saying where's that tam paper, where's that piece of paper, because nobody really realized that it had any value and some of them came back and then we've lost it and can we just get it back right? So it was really really good to see. They probably didn't think that anything would come off it right, so you get tucked away.
No, no. Luckily, finance had all records and everything's electronic.
But yeah, people had people were like that. Like I remember them coming saying they were scared it's gone.
