SynopsisGood businesses have not seen the light of day because entrepreneurs give up too early, says the MakeMyTrip founder.
In one of the memorable quotes, Rocky Balboa, the title character of the Rocky film series, once said, “It ain’t about how hard you hit. It’s about how hard you can get hit and keep moving forward.” The quote, today, can resonate strongly for many businesses, big or small, facing the consequences of a global outbreak. The travel sector, being one of the hardest hit, saw some tough times this year. However, for online travel firm MakeMyTrip (MMT), the economic downturn wasn’t something it hasn’t seen before.
Founded in the beginning of the century, MMT had the fortune, or rather misfortune, to experience different setbacks and economic downturns in its 20-year-journey. The late 90s was the ripening period of Internet companies, something which favoured the launch of MMT. However, within a year came the Dot-com bubble burst, which caused a bear market for nearly a year.
“We had a dream start, however, one year within our launch the Dot-com bubble burst happened. We had $2 million from eVentures and we were expecting another $1 million, everything was on target until 2001. The Dot-com bubble burst blew us up and our LPs wanted the money back, which meant that we had to either shut the company down or buy it back,” Kalra said at the recent TiE Global Summit 2020.
This was the moment where the fresh entrepreneur felt that the mettle of the company was being tested. Kalra mentioned that for two years, MMT went with severe pay cuts and no salaries for the upper management. Even though post 2005, the company experienced growth, but they were far from breaking even and closer to selling out or shutting down. That’s when Kalra’s perseverance took its role.
“Every time we thought of shutting down, we would say let’s go on for one more month. I am grateful that all the offers we got either fell short of the amount we had agreed or some other terms. Once in a board meeting, I had gone with the aim to sell the company, but the buyer quoted a price which we couldn’t agree upon. My colleagues and I agreed on a price of $10 million, but the buyer was only offering $7.5 million, so I walked out of the meeting,” he said, adding that one should never give in too early. Today, MMT’s valuation stands at over $2.5 billion.
Kalra, who is now a mentor to many young entrepreneurs, adds that that one’s entrepreneurial doesn’t have to be a competition with anyone else. “In the grand scheme of things, no one cares how long it took them to build a company. People only care about where the company is today and what it does and how many customers do you delight today. It’s great if you have built a company in a lesser number of years than someone else, but it is not a race. You can ask any entrepreneur what are the best days of their company and I would be shocked if anyone would say it wasn’t the early days when they were small, bootstrapped and replaceable,” he said.
He drew parallels between the struggle stages of the Dot-com bubble burst and the ones he faced during the pandemic. Presenting figures, he mentioned that during the first quarter of 2020 i.e., March to June when there was effective lockdown in the country, MMT had a revenue of 5%. That’s when they followed the previous guide of damage control- cutting down cuts. This, along with a slight easing of travel restrictions, helped MMT get a revenue of 20-22% in the next quarter. Since we have enforced work from home, it has also given up a third of its commercial real estate.
However, unlike the time in 2001, MMT could come up with more initiatives to revive its demand this time. This includes pushing high standards of cleanliness and sanitization, use of technology wherever possible to avoid human contact such as advanced digital payments and check-ins through face recognition.
“One should not be too fixated to build a great company and believing that their ideas are always right,” said Deep Kalra.Further, the travel sector witnessed a gradual green shoots recovery after June, with staycations and workations climbing the trend. Weekend getaways at premium hotels and villas at driving distances had helped the travel sector buck up during the crisis. Kalra strongly believes that if people follow the safety guidelines thoroughly and do not let their guard down, the travel sector will definitely crawl back.
“We are now at the stage where domestic flights are getting close to about 50% of pre-Covid levels and you can operate at 80% capacity. Domestic hotels are now about one-third of the pre-Covid levels and bookings around Diwali, Christmas and New Year have been higher, getting close to the 50% mark. That’s not a bad sign, it shows that people are ready to do it,” he said.
Claiming to be a big believer in revenge travel, he added that despite the high Covid numbers in the country, people are taking the risk to travel.
Needless to say, MMT and Kalra’s resilience results from pushing through the various economic setbacks in the last 20 years. Following the Dot-com bubble burst came the 9/11 attacks, which particularly hit the airline industry since people were terrified to travel in planes. MMT, during the time, was serving mostly the NRI segment. Thereafter, from the 2008 global recession to the Indian aviation blues during 2010-2012 and shutting of Kingfisher, MMT has seen it all.
Reiterating his statement to keep pushing when times get tough, Kalra said, “I fundamentally believe many good businesses have not seen the light of day because someone gave up too early. For young entrepreneurs, I really believe if things are tough, push it a bit more. Because you’ll have a bigger regret when you shut down and after two years find someone doing something with a similar business model, not as half as good as yours but still building a billion dollar company.”
At the same time, he mentioned that it is important to understand when to take a step back. One should not be too fixated and stubborn to build a great company and believing that their ideas are always right and original.
“There are many other ways of building a great company. Today, a single problem is getting solved by many players and therefore, what matters is how you can re-purpose your company, your team, to solve a greater problem and grab more opportunities, perhaps. Let’s not forget that Amazon originally sold books, but its team was smart enough to seize every opportunity that came its way and it continues to do so,” he said.