[Weekday Ep.] How MakeMyTrip Built a ₹60,000 Cr Internet Travel Company | S4 E4 | Destiny Avenged

People were looking but not booking. They were using us as a frame of reference, compare, go to their travel agent. With mobile, everything changed, and with cheap mobile, everything changed.

My thesis is very simple: what's being done on the phone will move to the internet fast. All of our young entrepreneurs who are listening may not even be able to think of year 2000.

2001, our world imploded, and you mentioned two of the things: dot-com bust, 9/11, and for us even SARS, which is the grandfather or great-grandfather, all happened at the same time. So for travel, we were ravaged. It was the triple whammy.

Yeah, when we IPO'd, we had 75-80% of our people who had ESOPs. It was so widespread, people didn't even recognize the value of that paper thing, right? You know, back then suddenly that paper has become very, very valuable.

The AI opportunity is the internet opportunity plus the smartphone plus mobile internet plus app all rolled into one on steroids, which means it's also a big threat. So we are doubling down because otherwise, some kid in some garage is going to come and eat our lunch.

There was a company called AMF Bowling, headquartered in Richmond, Virginia. I've heard of the story. Yeah. The world leader in making bowling equipment and running bowling centers, them and Brunswick. It was like a dual market. And I think Goldman Sachs had just taken them up as a PE investment or something. So they were really expanding. In 1995, there were 10,000 lanes in China already. They had put in total market looking at 20,000. India had zero. Actually, we had four manual lanes in Kotla, Delhi, and I had bowled as a kid and I said, yeah, this should do well. And I got so fascinated. This one-hour meeting with this gentleman who was heading their business development ended up being a three, four-hour marathon meeting, and I said, I'm on. And it was entrepreneurial. I worked for them, but whatever happened in India was, you know, my doing. I set up a small team. I got all of South Asia to run, including Pakistan. So much for the Americans. But managed to put in all 200 lanes in four years.

So, operationally, financially, it was obviously not a success. But I learned a lot. I learned all my street smarts. Then I met everyone in India who either owned real estate which is long enough to take bowling centers, which is 100 ft and 11 ft to get a pair of... Phoenix Mills in Bombay, one of them. That's my proudest project. So, I'll come to that. So, no one could think big. It was always four lane, six lane. Till finally, Atul Ruia with Phoenix Mills had the vision. He had seen some of this overseas, and he and I got along really well, along with Ad Singh who was CEO for the bowling company. And we set up this 20-lane bowling center where AMF gave a sweet deal and he gave the space, and it was a model center, 20 lanes, also 8 + 12, but it connoted what we wanted. But it took me three years, four years to sell that, and the next one was going to be something with DLF in one of the... and PVR with Ajay Bijli and DLF, and we were going to convert Select Citywalk in Delhi into a world-class thing, but that just took forever. Our Uphaar tragedy happened at that time, and I knew this is going to take too long. Big lesson learned, which I think I still stay away from it, and Rajesh and I were talking about this with some other context: making money on real estate in India is really hard unless you are, I guess, you know, a McDonald's or a Hiranandani or a, you know, at that time it used to be Shoppers Stop or whatever, it's really hard. It's always outpriced the actual asset. Yeah, the cost of real estate in India is just too high from the commensurate, you know, what you can earn from it. Also because we have no zoning. So that's a problem today our hotel industry is facing where hotel partners tell us the other day, Neeraj and I were on our common Zoom, and he's saying, listen, it makes no sense for me to now set up hotels because there's no zoning. Unless an Airocity comes along or something near the airport in Bombay comes along, I'll never make money. But I can make money doing residential, office, blah, blah, blah. So anyway, tried that four years, learned a lot of lessons, didn't still realize that I liked being an entrepreneur, and the panic set in that my learning has stopped. I would look at my batch mates from IIM and various places and say I need to go to an organization I can learn. And I joined GE Capital, and kudos to them for giving me a very exciting job. I was VP for business development, looking at new areas for distribution, which in '99 was the internet pretty much. So I only spent about 16 months there, but I got formally introduced to the internet, and in my personal capacity, for me, it was changing everything. And I tried to make some of that happen in GE Capital India, and to their credit, Promot set up, gave us a million dollars, set up a team to do geindia.com. But it was clear that that was going to be a Saturday project, you know, obviously because the bread was buttered from finance. And you know, the term startup didn't exist then, but now you realize why you need a startup to do different things. But you know, my story, Karthik, to be honest, started like a very normal middle-class, you know, thinking background, if you will, right? You know, and that is the background that we came from.

Actually, I did my CA. I didn't do my MBA in the same year as Deep did his MBA, '92 again. And that's how it started. And you know, what do you do typically after either you do your MBA, you do CA, you would look for a job which is, you know, one of the blue-chip companies, right? You know, the FMCG blue-chip companies or some of the multinationals or let's say Indian great corporate houses and all. And that's exactly what I did, right? So I joined Wollers for a couple of years, one year in Bombay, one year in Delhi, and large corporate, learned a lot early days. And then I got a very interesting opportunity to actually make a switch. It was a large organization, and I couldn't survive beyond two years there because it was less action, you know, slow organization, large organization, and I was maybe a little more restless and ambitious. And I got an opportunity, a very interesting tech education company back then, and I'm sure you would probably remember that was called Aptech. It's still around, right? An Aptech and NIIT back in the days, you know, and there was a computer education. That is correct. You know, and basic level computer education to, you know, taking into very many diplomas and nowhere close to, you know, any of the computer engineering colleges and stuff. But a lot of the other sort of population which was wanting to learn computers, we were teaching them. Yeah. Was a great stint, five years under a very dynamic leader called Ganesh Rajan. You know, it was fantastic to work under his vision. And I was doing finance role in Wollers. I was also doing finance role to start with in Aptech, but made a switch. I got an opportunity, made a switch to business role then. There itself, right? You know, because I always, that part I think it was clear, it was finance was more, you know, sort of let's say the academic background, maybe functional expertise, but desire was always to be very close to the business. Lovely. Right, you know, so that part was pretty clear. So first opportunity, you know, I got, I grabbed it. So I was leading a division of, you know, Aptech called Aptech Computer Education. They were their flagship division. It was a franchise model, and we had some 300 centers. I was leading north zone for them when I left, and that was five years. Beautiful gold standard, you know, just a golden period for me. Lot of learning and very progressive company, early days. So I was quite lucky, you know, from that perspective. So I think then after that was a very interesting move that happened. So, and I call it more as a dry run before MakeMyTrip, and that was a startup, you know, back then called Quantum Education. It was a net tech startup. We were trying to, back in the days, you know, a hybrid model of classroom and video lectures, trying to get a Master of Computer Science from University of Illinois back to sitting here, and a combination of classroom as well. Still haven't achieved this milestone. 25 years. Exactly, it was back then there was the attempt made. HCL stalwart, a gentleman called Mr. Anil Dhingra, he was the one who had set it up. Right. So, yeah, no, he was very, he used to run Network before he set it up. But very soon we realized, about 18 months at least, you know, sort of I was there, it was not a scalable model. One, it was very expensive, and it was not necessarily scalable because it was not necessarily live, although the degree was the same, it wasn't a correspondence degree if you know what I mean. It was not distance learning and all, it was exactly the same degree. But it was unscalable, it was very expensive, maybe pre-sunrise. But it gave me enough, you know, sort of hunger and appetite and perspective change, if you will. It was good to work with a, you know, some organization where you're sort of building from scratch, if you will, right? And that is when I met Deep. And you know, and again it is a known thing, by the way. Yeah. So matchmaking, actually regular routine channels, right? I went to meet him through a consultant. He was looking for a CFO. Okay. OAM consultants, right? You know, back in the days used to be big like an ABC consultant. There was an OAM consultants as well, right? So, and that's why when I met him, so, and I've said that, and it's in public pretty much in every sort of either podcast or forum, that the game changed when I met him. And it wasn't at that point in time on my mind, to be honest, that MakeMyTrip as a business model, what is that, mean.com or was I thinking .com or internet at that point in time. And Deep had built that model. I wasn't thinking at that point in time that I was just in my mind, it was only, you know, I want to work in a young company, I want to work in a startup, I want to, you know, be part of the journey from literally scratch, etc. And that was one part of it, that was exciting. And then after meeting Deep, everything changed because at that point in time, and it is true, and a lot of the time that people say at this point in time, you know, from an investor perspective, and you've been investor, you know, all your life or most of your life so far, that you actually back the team, right? You know, you look for a founder, you back the team, which was exactly what the thought process at that point in time in my mind was, you know, because MakeMyTrip didn't really exist at that point in time, right? It was too young to judge. It was just too young to judge an organization in that sense, right? So you were basically meeting a person, you know, getting comfortable with that meeting, and, you know, and making a judgment call, right? And he was making a judgment call on me, and I was making perhaps a judgment call on him. Right? So that's how it started.

2001, our world imploded, and you mentioned two of the things: dot-com bust, 9/11, and for us even SARS, which was the grandfather or great-grandfather, all happened at the same time. So for travel, we were ravaged. It was the triple whammy. And we were totally ravaged at that time. I think it was the real test of what do we believe in. And do we believe enough? Because one, our backer, the company, Ventures, wanted to wrap up, bought back the company, whatever money we could. At that early... in 2001. So that was our toughest moment of existentialism: do we believe or not? And at that point of time, I think that's when Rajesh from the outside was helping us. By the way, that thing on the outside, he was doing a build-operate-transfer to fund MakeMyTrip. So that was e-bookers in the UK. They wanted something done. They wanted both of us to run it. I obviously wanted to straddle this. So we had a nice understanding. He was running that. Delivered a connection to... Yeah. Yeah, delivered a beautiful center to them with 250 seats, 230 seats, and a state-of-the-art center. And then when we got him back, and two other gentlemen, Kaur and Sachin, and you know, I always say, just recently I was saying, their contributions to MMT, all three of them, have in no measure been, you know... So I got the number wrong, it's not 20, it's 25. Four sitting with e-bookers as well. So you've been there almost 25. Yeah, pretty much. And so I think for us, that was our real moment of reckoning. Do we believe enough to go without salaries, to make sacrifices, to convert salaries into, you know, whatever this would be worth, this paper? And so many people left. And I think we're glad they left because we couldn't afford everyone. So yeah, that's the reality. But they left on their own because it was clear: senior people take a cut, junior people no raises. Overnight we shrank from 42 people to 24. So we lost 40 people, 40%. We moved from a nice office in the cheap area, Okhla Phase 1, but at 30 rupees a square foot, to a mezzanine in the same building at 12 rupees a square foot. And a long thing, it was like a railway bogey where we sat and we worked together. And three of us, when we swiveled around, we had a little round table smaller than this, our knees hit each other, but we still had a TV up there to watch cricket. 2005 to 2010, we grew 25x. We raised four rounds, so safe on each round. Second round split between Helion and Sierra, because again, we're nice guys and couldn't say no to one. And I'm glad we got both because we had Ashish and Sanjiv from Helion, and we got Tim Guleri from Sierra. Tim is still on our board. So Tim sold, Sierra sold out in 2010 after the IPO. We requested him to stay on, and he has been a rock. I mean, and you know, the lesson for everyone is: if you get a good board member, don't let them go, just like an employee, just like a colleague, don't let them go. We just wanted Tim's wisdom also. He brought a very different perspective because he had taken, grown his own company, a software company, taken it public, then been in Sierra, and he's just one of those who gives a 100%. So all odd times for him because he's sitting in San Francisco, never miss a call. 5:00 a.m. in the morning, 1:00 a.m. at night, Tim's on the call. He's just amazing, and he's been very, very grateful. Very, very useful. We've been very grateful. And then third round was Tiger, Tiger. And Leaf Pixel and Tiger. Yeah, he's a dear friend. And then Rajesh got to know him really well too because he got Rajesh on the Flipkart board, etc. Yeah, I remember. Yeah. And we have to give credit to Sanjiv Bikhchandani who was another independent for us, and great friend, philosopher, guide. And I think, you know, if there is to be a benchmark for corporate governance, it's Sanjiv. Learned so much from him. And Sanjiv tells us in this board meeting in January 2010, and in his typical style, saw the material, saw the slides, and he says, you guys are ready to IPO. And Rajesh and I looked at each other, I said, really? He's saying this was our size, and we were 40 million in revenues then. That's right. They were actually not super-sized when... We were 40 million looking at 60 million, profitable, because we weren't super-investing in hotel or anything. He's saying, yeah, you guys are ready. We IPO'd then. And you know, Sanjiv, I won't say man of few words, but man of fast words, speaks very fast. We had Americans on the board to tell him to slow down. They could understand what he was saying. And so Rajesh and I said, okay, we'll do some work post the board meeting. We had not thought of it yet. It was there. One thing was very clear: you have backers, there's no need to... One thing was very clear: we want to build for the forever, we don't want to sell. We were in it, and we said, okay. And we put our heads together, and I think next month Rajesh organized this bake-off meeting. We had bankers, we had lawyers, we had, and we had our auditors. So everyone was there: Morgan Stanley, KPMG, lawyers, yeah, Latham & Watkins, and then S&R in India, everyone together in the room, Trident, Gurgaon, and it was the bake-off. And Sanjiv warned us, listen, India is another story, India versus US, if we have time, you'll take, in India it'll take you one year, US we don't even know how long it'll take you. Oh. And all the market feedback we got, our board was split down the middle. So I'll tell you quickly: so I took a week off, Rajesh and I spoke to many people. I spoke to at least six people in depth of the experience of listing in US and India. And finally we came to it: e-commerce model in India is not understood. We were e-commerce. Unlike Info Edge, Info Edge got their money from companies. Correct. B2B. Ours was B2C. And we felt we'll be better off in the US, and we decided to go. Yeah. And you know, that more comps, more and less. So there was Expedia and then there was Ctrip, and we went ahead as the Expedia of India. Slide number 14 on our deck was just the comps. People only wanted to see that deck. So, and full credit, I think, to Rajesh, CFO, and his team. In six months, we IPO'd on August 12, 2010. Six months from kickoff bake-off meeting. Amazing. They pitched tent in office. I was thanking KPMG the other day, and he was driving them, and they just worked relentlessly with a goal: we have to catch the summer. We got the last week before the break when everyone, you know, all of Wall Street's gone. Wall Street's gone, Boston's gone. And we were marketing. We did a two-week roadshow for the Hamptons month. Yeah. Yeah. You know where they are. So they're clearly not in their office. And luckily for us, we met that window. We priced at 14 bucks, and you know, the rest is history.