Founder and CEO, Info Edge
Sanjeev Bikhchandani is one of the few people who saw the potential of the internet for value transactions. As a result, Naukri.com became a success story, defining the Rs 240-crore online jobs industry. His company Info Edge listed last year, and now has a mind-boggling market capitalisation of around Rs 2,400 crore. Tarana Khan and Kapil Ohri spoke to him about the Timesjobs controversy, Web 2.0, and whether Naukri has been successfully able to leverage the first-mover advantage
Q. Mr. Bikhchandani, Naukri had the first mover's advantage. How important, and sustainable, is this for you?
A. Being the first mover really helps, provided you make good use of it. So, for us, it really helped. We understood early on what it takes to create value for customers, what it takes to get revenue on the internet, what it takes to make a profit. In that understanding and knowledge, we were years ahead of the competition. So, it gets a lot easier to remain a leader. The fact is that we launched based on a deep customer insight. Others who came in took a few years to understand what it takes to build customer value -- and we were three years ahead. So that's the big reason why we succeeded.
Q. Now, the online job industry is pretty competitive. Times Jobs started a whole campaign claiming to be No. 1, to which you did respond, but they have continued with it...
A. We are actually quite delighted, because our resumes are up by a 20-25 per cent and they remain up. Currently, our resume acquisition rate is higher than ever before. What has happened is that Monster is actually No. 2, so our sales guys are happy. Because, that's like saying Monster is not No. 2. Look, we are in a market where results are measurable. If you do a job search on Naukri, you will know how many results you find, and if you do a job search on TimesJobs, you know the results. You will be able to evaluate which is the No. 1 site. Similarly, in the recruiter's side, you will know how many resumes you got from where. So, in a market where results are measurable, both the job seeker and the recruiter find it easy to evaluate competitive offerings. And when that happens, no amount of big ads can sell a lie. So, that's okay and we are pretty comfortable there.
Q. Do you think there is a lack of standardisation in terms of the definition of 'active resumes' or the numbers? Because people are quoting from different sources...
A. See, if you look at our IPO document and all our official communication, we rely more on comScore than Alexa. Having said that, we use all available data. No data source is perfect, so we use a combination of multiple data sources to arrive at conclusions. We use these data to look at trends to see if we are growing, if competition is growing faster and if the gap narrowing and the like. So it’s more of that kind of stuff rather than saying 'this is absolutely 100 per cent reliable'.
Q. Naukri is your flagship product -- how are you going to incrementally grow this business? There are numbers, of course, which can be added on, but what features or elements can you add to that product?
A. We have a very strong product and user-experience agenda. We have done a lot of work in the last 12-15 months on the product. A lot of the stuff that we do is not visible on the site, because it's in the nature of relevance ranking, algorithms and things like that. A lot of that stuff is working very hard for the clients. So, we are making serious investments there. What we realised is that if you do any feature, the competition can copy it very easily because it's visible on the site. But if you fix something which they can’t figure out, we believe that is defendable intellectual property.
Q. For the recruiters on your site, are you just concentrating on the display elements or are you offering them something more innovative in terms of exposure?
A. No, we are doing both . We have got resume database and listings products and display. Clients know what is working for them because we get 70 per cent of our business from repeat buyers.
One of the big problems in recruitment advertising online is applicant spam. So, if I put up a job and I get 500 applications, there's a large percentage of applicant spam -- junk people who are not suited for the job. Now, going through those 500 applications is a pain. Over the last two three years, we are working hard on how to minimise applicant spam. I believe we have made substantial progress through our job search algorithms.
Q. So, your focus is more on algorithms rather than cosmetic changes, like maybe video?
A. No, we will do whatever makes business sense. We don't believe video will take over all this and become mainstream in a hurry. We have been discussing video for the last couple of years and it's a question of prioritisation. If it looks like video resumes are taking off, we will definitely do it.
Q. Any other features you are considering -- maybe a networking tool – for the site?
A. I would not be able to discuss that, but we have a very strong product innovation agenda and you will see some of the stuff coming out pretty soon.
Q. Would that be a web 2.0-based innovation?
A. Yes. Everything we do, even the algorithms, are Web 2.0. We are not confident of social networking just yet. We don't believe there's a revenue model there. Having said that, if we do find a revenue model, we will definitely look into it. But we would like to get into businesses where there is at least some clarity of what the potential revenue model could be. As a company, it is not in our DNA to put up a site and say, `If it gets traffic, we will somehow make money’. We need to get the business idea before we launch a site.
Q. A lot of action is happening on social networking these days, and people are getting in touch with each other through these sites. So don't you think this is a challenge for you because people can now get job referrals through these social networks and companies can get in touch with people through them?
A. You have a point there, and if we see a revenue model, we will definitely do something. But we have to see a revenue model first.
Q. But do you see that as a challenge?
A. The challenge is that on social networking, nobody is making money. People may have valuations, people may have traffic -- but nobody is making money. Now, a lot of people are justifying this by saying that if you get traffic, you get to make money. That works for Google. It may or may not work for other sites. So, really, somebody has to show the way out for social networking. And we are not sure whether we are those people. The jury is out, and it will have to be worked out. Right now, there's some doubt.
Q. Some people we've spoken to in the industry say that classifieds will eventually die out. Do you believe that?
A. No. And I'll tell you why. Look at the history of any medium. When TV came, people said radio would die. That said, it's at least prospering. When TV came, people said print advertising would go away. But it hasn't. When internet came, people said the intermediary would go away. That's not happened. So, people generally tend to exaggerate or hype these things. Will social networking be used for finding people, whether for dating or marriage or jobs? It possibly will be. But will social networking replace them? I don't think so.
When you put your profile on a matrimonial site, you are announcing your intent that you want to get married. When you put it on a social networking site, you are not announcing that intent. So, the likelihood of a handshake happening is a lot higher (on a matrimonial site). When you put your resume on a job site to a client on it who has access to the database, you are announcing your intent that you are looking for a job. And therefore a serious conversation can be held. When you are on a social networking site, you are just saying who you are. Whether you are looking for a job or to get married...nobody knows. So the productivity of a recruiter is a lot higher on job sites. Now, can networking sites be used to find people who are not on job sites? As a support tool, yes. However, will it replace job sites or matrimonial sites? No, it will supplement. Dating...quite possible.
Q. Do you think localisation is the key to move ahead?
A. Yes. If you look at TV, when cable TV first came in, it was only English programming like CNN and Star. It remained a 'big city, upper-income' phenomenon. When did it really penetrate? When all the Hindi channels were launched on cable, starting with Zee. And suddenly, people figured that local language is the way forward. Now the vast majority of content on internet, globally, is in English. All the Indian content is also in English. So you don't have great applications if you don't have great content in local language and therefore it’s not going to drive a lot of people online unless they are English-speaking first. So, you'll have to do more than that.
Q. You also have an offline business -- Quadrangle -- a pretty old business of yours...
A. Well, actually that business is more recent than Naukri. We got into it in 2000.
Q. Fine. So that company is doing offline what Naukri is doing online, as I understand...
A. No. Naukri is a medium and a platform. A lot of recruiters use Naukri, including headhunters, and including Quadrangle. So, at Naukri we just we just enable handshakes. At Quadrangle, it starts from the first handshake and takes it to completion.
Q. So you felt it was important to have an offline business?
A. Yes. Quadrangle is a good business, it's growing well and it's cash positive.
Q. Would it continue to have a separate brand or do you want to take it into the Naukri brand?
A. As of now, there are no plans to change the brand name.
Q. And even Jeevansaathi and 99acres have potential for offline businesses. Would you consider that?
A. As of now, no. We believe that when you are not charging any high prices, there isn't enough money to be made by both the franchisee and you. We want to study the ability of a model to make money. Because if it doesn't make money, it is not viable. We can get into it only if we are convinced that the franchisee will make money, and this is the best move forward.
Q. Most of your revenue is coming from the recruitment business. How do you want to scale up the other businesses?
A. The recruitment business last year recorded some 88-89 per cent, and this includes Quadrangle and Naukri. We are not disclosing them separately but the bulk of revenue is Naukri but therefore it is less than 88 per cent. Maybe it'll be close to 80 per cent. The other businesses are scaling well, but the percentage will not change in a hurry because Naukri is also growing very, very fast.
Q. What are your plans for mobile? What's your opinion on using mobile as a medium?
A. Mobile is not a huge challenge; it's just small screen. There are two, three aspects of mobile. Nobody anywhere in the world, in my opinion, has cracked a really good model of accessing the web on the Net. Even Google. Why do you believe Google is the best search today? Because in a page of 10 or 15 results, if four are what you are looking for, you say it’s a good search and a good search engine. On the small screen, you will get three results and all three need to be the ones you are looking for. It's a very different standard of accuracy.
However, if you say that the mobile is not a tool to access a website or surf, it is a tool to communicate, then it makes sense. So, the user is already registered with me on the website and I am using mobile as a tool to communicate with him because he is not online all the time. That can work. And we believe that is route forward, at least in the short run. It's not a surfing tool, but it's a big communication tool. So, you can recognise that and say that the mobile is for communication not for surfing. And enabled with accuracy in the information inside it, you will find that mobile is working for you.
For example, we can send in job alerts. The recruiter can access the database and send an SMS. Those kind of things will work. SMS is a big one in
Q. You started off in the online industry when it was tiny in comparison to today, and you’ve been at it for about ten years. As an entrepreneur, how would map the transition?
A. The first big thing is that the penetration of the internet has increased substantially. So, when we launched Naukri in 1997, there were 14,000 internet accounts in the country. It must have been a couple of lakh users and in 2000 there were 4 million net users. Today, people are talking about 50 million or 70 million...those kind of numbers.
What this has done is that this has made a whole lot of internet businesses viable suddenly, which were not viable seven to eight years ago when the meltdown happened. And because of this, you are seeing investments coming in, you are seeing more and more start-ups and entrepreneurs. Therefore, a lot more action is happening, which is a good thing. When an industry grows and develops, you see a lot educational initiatives like training happening. You see companies growing and I think that will help in moving the industry. I think we are now an industry – earlier, we were a bunch a start-ups.
Q. So what's the mood, now that there is a resurgence?
A. The mood is back to being euphoric. However, this happens to all markets, which tend to over-compensate. So, there was a bust in 1999-2000, but today it's again euphoria. But I would say it is not like 1999 because today there is a real user base, real markets, real revenue happening. Therefore, I believe that a lot of businesses being created will be viable. Some will fail as it always happens, but many will be viable.
Thank you, Mr. Bikhchandani.