Tough times teach you the most, says Deep Kalra, founder and CEO of MakeMyTrip. In an interview with Malini Goyal on the ups and downs in his startup journey, he says young entrepreneurs should think like marathoners. Edited excerpts:
Travel is a discretionary spend segment. What signal is it sending on the state of the economy?
I can sense the beginning of a slowdown. The industry saw 52 months of double-digit growth, except in the last four months when the growth was in low single digits. The domestic sector is slowing. Interestingly, international travel is growing. But remember it is the same sliver of top 10-20 million Indians who are travelling and spending. The credit squeeze and problems with non-banking financial companies now seem to be cascading down and affecting everyone. Some hotels in Goa we spoke to have seen a dip in occupancy. But air ticket prices haven’t come down.
It may also have to do with the new trend of booking apartments and villas. India must ensure tourism is developed sustainably. Recently, I went to Manali after 24 years. We have totally pillaged the place. From north Goa to Leh and Shimla, it is all the same. Domestic tourism is dying. People prefer to go overseas, which is cheaper and offer better experience. Phuket is many times better than most domestic destinations.
It has been almost two decades since MakeMyTrip started. What would you do differently if you were to start all over again?
Being an entrepreneur is very lonely. I think I was foolish to start alone, though I was lucky to get three wonderful people on the way. If I have to do it all over again, I would start with a cofounder who brings complementary skills and is a great sounding board.
I have learnt a lot. Tough times teach you the most. In 2001, I learnt that never depend on a verbal contract. The world can change overnight. My advice to young entrepreneurs is if you are getting money, take a little extra. They must have a mentality of a marathoner and should not expect anything to happen in the first three years.
Reflecting back, how has your journey been?
We were born in difficult circumstances. Remember SARS, dotcom bust, 9/11? So bad was the situation that we even thought of dropping the dotcom part from our name. We focussed on India-US NRI travel. But technology helped us offer good fares on hopping flights to the US.
Between 2001 and 2005, we often had operating expenses for just three months and were mostly hand-to mouth. What gave us hope was that our conversion rate was improving every week.
After 2005, the emergence of low-cost carriers gave us another chance to win using technology as travel agents didn’t want to sell low-cost tickets. That was a game changer. In 2011, two leading airlines decided to cut us off. We were trying to be cute with pricing. Then, 90% of our revenues came from air travel (today it is down to 34%).
It took us around two weeks to get them back. It helped me realise that pricing will be the prerogative of suppliers (airlines). We are only intermediaries. Today, we have 26.4% market share in air ticket bookings (in India).
It is nice to be the market leader. We want to offer great experiences, not just be a preferred brand. I admire Amazon for its execution excellence and Apple for its finesse and class.
How has Indian travel industry evolved?
It has changed a lot. If we look at online consumers, about 50 million are very comfortable buying online and another 50 million are buying just because of discounts. The top 20 million travelling overseas today are like any other global traveller.
Globally, tourism industry prefers Indians to Chinese travellers. Chinese don’t spend much, move in groups and are tough negotiators always trying to bring down the tariffs. For Indians, travelling is a celebration and they spend. Indians also make travel plans at the last minute. But for the best deals, book two to four weeks in advance.
Airlines are going through a rough patch. Do you have a view?
The Indian market is not big enough for seven players and is getting a much-needed shakeout. Jet Airways is a classic case of a poorly managed airline which ruled the roost when there was no competition. It was the biggest loser with Indigo’s arrival. Indigo, I think, is the world’s most efficiently run low-cost airline.
Udan scheme is among the biggest successes of this government. It has connected 100 airports and changed the way Indians from small towns travel. While many new airlines have come up under the Udan scheme, we are cautious after the MDLR fiasco. For any new airlines, we hold booking payments till customers fly.
How have you evolved as an entrepreneur?
In early days, one does everything. Slowly you learn to delegate. What I have learnt as an entrepreneur is that it is easier to get good people but harder to keep them. Especially, if you don’t give them latitude, they will leave you.
This means you don’t look over their shoulders. The biggest yardstick to test yourself is how do you react to decisions that did not work out well and were not taken by you. At that time, you have to send the right signals. Get into not who did it but why it was done. Our biggest challenge is attrition. We are a great hunting ground for big digital MNCs.
Today, what is your focus area at MakeMyTrip?
Doing product reviews is what I really enjoy. I am involved with investor management. I also spend time in hiring and motivating people. I don’t do skip-level meetings. I don’t think they work. It is more like looking over someone’s shoulders. Sometimes I engage with our marketing and TV campaigns too. In 2016, we signed up Ranveer Singh and Alia Bhatt — the first time we signed up celebrities. They help you not so much in building credibility but getting you noticeability.
How has your journey been as an angel investor?
As an angel investor, I have done over 40 deals. But now I have come to a painful conclusion that I can’t do both — doing direct deals as an angel investor and being a hands-on entrepreneur.
So now I put my money in a range of funds. They are experts and they will make better decisions. Angel investing is a full-time job. But I still mentor entrepreneurs — one or two of them every week over one-hour slots.
Being in the travel industry, how often do you travel?
We holiday at least once a quarter. We all do scuba diving so it is also a good family time. When it is just me and my wife, then we pick places where we have lots to see and do. While we have travelled a lot, I would love to travel to Latin America and Antarctica. As a parent (of two college-going children), it is important to create a common interest area or have activities you can do together.
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