In 1997, Muruga was working in the US as a consultant when he discovered the internet. He says, ‘I knew I wanted to do something on the internet. As I searched online for offerings for Indians, I saw content sites like Sify.com, Samachar.com, and Rediff.com. I thought of starting with something familiar to me, which was my Tamil community. I designed and coded a website called sysindia.com in just a few days in 1997. I threw in features like the Tamil daily calendar, festival reminders, tips, etc. One could register their email address on Sysindia and choose the festivals for which they wanted reminders. We would email them before the festival with details regarding what is auspicious, etc. If one wanted to book tickets to India, they could put up a request on Sysindia. We would send the details to travel agencies to do the customer’s bidding. There was also a Tamil greeting cards section and finally, a matrimonial service.’
For two and a half years, Muruga continued to work on Sysindia as a one-man army along with a day job. He worked on the website after work as a hobby until, one day, he put his own profile on the matrimonial service. The man who is now his father-in-law reached out to him and asked for his horoscope. They had a match! That’s when it dawned upon him that users of his site—mostly bachelors—were using the matrimonial service more than anything else and that there was an opportunity to build an exclusive matrimony service. Murugu adds, ‘I initially launched only Tamil and Telugu matrimony because I was born and brought up in Royapuram, Chennai, which has a sizeable Telugu community. BharatMatrimony.com was available as a domain and that became the parent name.’
In less than three years, from a horizontal, community portal, BharatMatrimony went into the deep vertical of matrimony. As of today, it boasts of over 300 websites under that banner. It was a coincidence, or perhaps it was the right alignment of stars, in 2000, when there was a massive global recession during which Muruga got laid off. He returned to India to start his own office in a modest 300 sq. ft. facility at T. Nagar, Chennai. He hired a gold medallist from the University of Madras as his first employee. And so, BharatMatrimony was in business. Muruga created a pricing strategy only when he eventually converted the website to a paid model. For Indian customers, the cost was ₹300 till they found a partner, and for US customers, it was $10. Today, the business model is different because the registration is free, but you can establish communication with prospective partners only by becoming a paid member. Muruga adds, ‘Yes, today, that’s a hook. To get the contact details of the prospective partner, you have to become a paid member. Gradually, from ₹300 per year, we changed the cost to ₹300 for six months, and then to ₹300 for three months. Now the cost is ₹4,700 for three months.’
RAISING CAPITAL
Not many are aware that in 2004, someone from the famed investor Tiger Global had approached Muruga and gave him a term sheet. Muruga had a small but profitable team by then and he found the clauses in the term sheet discomforting. Much like Sanjeev Bikhchandani’s initial reluctance to take outside capital, Muruga refused to sign the deal. He cherished his independence too much and the business was also growing organically. Muruga modelled his company on InterActiveCorp (IAC), an American media and internet company which owns over 150 brands across 100 countries. Muruga was closely following IAC which continued its growth through acquisition, adding assets including TripAdvisor, ServiceMagic and Ask Jeeves in 2004-05. In August 2005, the company bundled together its travel-related sites and spun them off as a new public company, Expedia Group. Muruga was fascinated by this and began to create his network of websites. Clickjobs. com and Indiaproperty.com were launched in 2005. Indialist. com (local classifieds modelled on Craigslist), Loanwala.com and Indiaautomobile.com were next in line. Somewhere during that period, Yahoo! and Shaadi.com announced an exclusive alliance to launch a host of wedding and allied services channel called India Matrimony on Yahoo India’s website. India Matrimony was going to give a one-stop opportunity to find life partners to its 29 million registered users. It was a massive win for Shaadi.com. This happened during the display network era before Google hadn’t even appeared on the horizon and all vertical websites relied on Yahoo! and Rediff.com for traffic. This partnership meant that BharatMatrimony was getting locked out of the Yahoo! gateway. Since the only other search engine of significant size was Rediff.com, Muruga went to meet Ajit Balakrishnan in Mumbai to propose a partnership in exchange for some equity. Would Rediff.com subsidise the traffic costs and go exclusive with BharatMatrimony? Would Rediff.com not accept ads from Jeevansathi and Shaadi.com? Muruga says, ‘Ajit liked the idea but wanted a majority stake in exchange for providing exclusive tenancy to BharatMatrimony on its portal. I dismissed this counter proposal and went back to building the business on my own. Then, in 2005, things started changing. Companies that had been around for a while and had survived the dot-com crash were seeing a lot of interest from investors again. MakeMyTrip, the leading travel portal, had raised $10 million in 2005 from SAIF Partners; Info Edge (the parent company of Jeevansathi) was rumoured to be preparing for an IPO in 18 months. And our biggest competitor, Shaadi. com, announced an $8 million venture capital investment by WestBridge Capital Partners.’
Given the environment, Muruga knew that if he didn’t raise capital for BharatMatrimony and his other websites now, then he was going to be left out. He recalls, ‘It wasn’t an easy run because many investors came back with similar feedback that matchmaking is a one-time opportunity for monetisation since it is not lifelong. You need to acquire new customers every day. I met more than ten investors around that time but couldn’t raise money from any of them. We were generating revenue of four million dollars then and some of the investors made lowball offers of $10 million valuations.’ Muruga refused to entertain any such conversations. He adds, ‘I remember 1 January 2006 because my investor’s banker told me over a phone call that we had run out of options to raise money. That is the message I got on the first day of a brand new year. I told him that we should continue to put in our best efforts and something will work out. Suddenly, out of nowhere, the investment bankers organised a meeting with Yahoo!. I told them that there was no pointing in meeting Yahoo!. I didn’t want a strategic investor because I wanted to run the company. I was extremely reluctant to meet the Yahoo! executives but the bankers insisted.’ Muruga finally gave in and went for the meeting but managed to persuade Yahoo! to join them as a financial investor rather than a strategic investor. Strategic investment had been Yahoo!’s initial intention because they had no need to invest capital to make money at that time but they agreed with Muruga’s proposal.
This was Yahoo!’s first investment in India. A few months before this, Muruga had also met Cannan Partners (a global early-stage venture investor). Cannan had set up its first office in India but hadn’t shown much interest in Muruga’s company. Anupam Mittal, the founder of Shaadi.com, told me that Cannan had been negotiating with his company for a while to invest. Things didn’t end well between the two parties and Anupam walked out of the deal. Right then, Cannan got the wind that Yahoo! was considering an investment in BharatMatrimony and jumped in to participate in the financing round with them. In August 2006, BharatMatrimony announced an $8.65 million financing from Yahoo! and Cannan Partners as maiden investments from both. Muruga adds, ‘Cannan had freshly recruited Alok Mittal (co-founder, JobsAhead.com) who was going to represent Canaan Partners on the board. I was looking forward to learning from his experience and expertise which would give a definite competitive advantage to BharatMatrimony’s Click Jobs. Meanwhile, Yahoo! dumped Shaadi.com as their exclusive partner and replaced them with BharatMatrimony. Armed with fresh capital, Muruga began executing his plans across all verticals quickly and opened up many more fronts.
BLOWING IT ALL UP … ALMOST!
The investments filled Muruga with the new ambition of dominating many verticals. He wanted to showcase successful business models to provide an array of world-class services including matrimony, property, automobiles, jobs, listings and SMS services. This lead to him rebranding himself as Consim Info Private Limited. He says, ‘The new corporate name had been designed to represent the group’s various business verticals: BharatMatrimony.com, Clickjobs.com, Indiaproperty.com, Indialist.com, Loanwala.com and Indiaautomobile.com under a common philosophy. As a group, we had consolidated the online internet space and believed that the mobile interface would add value to internet businesses.’
The company announced ₹57 crores advertising budget in 2007-08. The spending would be divided between Clickjobs. com (₹25 crores), Bharatmatrimony.com (₹20 crores), Indiaproperty.com (₹10 crores) and Indiaautomobile.com (₹2 crores). Further, the company planned to launch a portal for motorcycles that was to tap into the new and used motorcycle market by tying up with 1000 bike dealers in less than a year. Muruga recalls, ‘We kind of spent most of the money on marketing within that year. Almost ₹15 crores had been spent on TV marketing in one burst. We had a play in all these classifieds like jobs, matrimonial, real estate, and vehicles with competitors in each. It turned out that $8 million was too little for the entire portfolio to grow and succeed.’
This was his first real setback. Thankfully, for Muruga, right before they ran out of cash in early 2008, they managed to raise another large round of $11.75 million. This time, Mayfield Fund led the round and there was participation from existing investors, Yahoo! and Canaan Partners. In a press release during that time, Muruga said, ‘Receiving investments from global players like Mayfield Fund, Yahoo! and Canaan Partners is a recognition to our company. We plan to leverage this fund to expand our matrimony business in the international markets and to strengthen our classifieds offerings. We believe that the global knowledge and experience of our investors will help us scale our business strategically.’ Evidently, Muruga was still hurting from how badly he had depleted the first round of financing. Thus, temporarily he had dodged the bullet. The spending continued but now, he was cautious.
Excerpted with permission from ‘How I Almost Blew It’ by Sidharth Rao, published by Westland.
Main image courtesy: Wikipedia/Daphinevadhera
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