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August 26, 2013

Deep Kalra (Makemytrip)--Success through unconventional path

Introduction


Deep Kalra is a prominent name the dotcom industry in India.  He is one of the rarest entrepreneurs, who defied all negative voices concerning the future of dot-coms in India.  Despite being an IIMs graduate, which is considered to be a prestigious MBA degree in India, he chose an offbeat and uncertain path.  His brainchild MakeMyTrip.com is a leading travel service provider in India at the moment and is a one-stop shop for all of the travel solutions such as hotel/resort booking, air tickets, tickets for buses and trains and travel packages.  Furthermore, the portal, which ranks on top of search engine pages for travel related queries in India, offers cheap and competitive rates as far as hotels and other services are concerned.


Early Life


Deep Kalra did his BA in economics from New Delhi's reputed St. Stephen's College in 1990, followed by MBA from Indian Institute of Management (IIM), Ahmedabad in 1992. 


Beginning of career and launch of MakeMyTrip.com


After the completion of his MBA, Kalra joined Bank, but left banking sector soon after.  Then, he took a sabbatical for one year to decide what to do next.  In 1995, Deep joined AMF Bowling, a US multinational, which was trying to set up gaming facilities for billiards and bowling in India.  Though, he successfully opened some 200 lanes, but he didn't receive required mentorship and supervision from his American bosses.  After four years, he had to return to his safe banking career, but he got bored again and decided to launch his own first entrepreneurial venture MakeMyTrip.com in the year 2000, in the United States.


Business of MakeMyTrip.com Later on, MakeMyTrip.com was launched in India in 2005.  The dot com was created on a B2C model providing services related to international and domestic air tickets, hotel bookings, holiday packages, domestic rail and bus tickets and car rentals.  It also provided services for exhibitions, conferences, incentives and meetings.  Recently, it has also started its B2B and affiliate services.  The company launched its IPO in the year 2010.


The difficult decision


It was difficult to travel in India, when MakeMyTrip.com was launched in 2000.  But, Kalra was absolutely confident about the power of Internet to change the way businesses were conducted.  It offered the customers many choices and an opportunity to compare the prices online, so that they can go for the best option; something, which was unthinkable at the time, when the brick-and-mortar travel agencies ruled the market.  Furthermore, people did not trust online companies, especially the startups as far as using their credit card was concerned.  MakeMyTrip.com was way ahead of its time.


Misfortune strikes at the first step


Soon, MakeMyTrip.com was caught in bad weather. The dotcom bubble had burst and though the startup was able to raise some venture capital prior to it, it was denied $1 million, committed by some financers.  He was barely 31 years old at the time with a family to support.  Entering a new business, especially a dotcom business was crazy and suicidal at the time, especially in a country like India.  But, then he began to fight back and continued with two of his managers, bringing some of the equity on table that they could arrange.  But, Kalra had a strong belief in the saying that you regret the things you're not able to do, and not the things that you ultimately are able do. 


Achievements


Make my trip.com has a profit of US$5 million at present and total volume of its gross bookings exceed US$500 million.  The statistics are also impressive, with 90% increment in the revenues during the global recession of 2008-09.  Every 12th domestic flight in India is booked through MakeMyTrip.com.  The portal also sells around 3000 railway tickets every day.  Kalra is looking to hire some US trained professionals to optimize his team for enhanced productivity and innovation.


The right decision at the right time


Looking back, Kalra is quite pleased with his decision to take risk, when it was needed.  He's also happy about this decision to continue with Indian domestic market, where he faced less competition, as compared to what it would have been in Silicon Valley.  The concept of instant travel reservations has proved to be a boon for Indian market, where long queues and enormous delays bottlenecks are the norm.  It has empowered the common man and enable him to save a lot of time and money, which he does beating the traffic and visiting the brick-and-mortar travel agencies.  It is a delight for both the customer and the investor.


Staying profitable even in poor economy


MakeMyTrip.com has stayed profitable even in the inflationary conditions and poorly performing economy, where the e-commerce ecosystem is still very new and immature.  After the IPO peak, its total stake of US$50 million has come down considerably and its revenues have also declined by 5.5%.


Launch of hybrid offices in smaller cities


Kalra admits that they have had their fair share of highs and lows, during an interview in his office, which is creatively decorated with holiday pictures and swipe cards.  According to him, the number of highs exceeds the number of lows.  He's quite proud of the fact that one out of 8 flights is booked on his portal and a significant number of vacationers for Goa and spacious Ladakh regularly visit his portal to find travel solutions.  It is also opening some brick-and-mortar offices in the smaller cities to give it a look of hybrid travel agency having presence, both online and off-line; because in India people in the smaller cities don’t trust online transactions and online companies. 


Revenues and profits


There has been a quantum jump of five times in its revenues in the last four years.  The total revenues in the year 2013 are estimated to be at $66 million.  The profits had hit a high of USD 9 million in the year 2012.  It was listed on NASDAQ in the year 2010 through its IPO.  In the year 2011, it acquired Luxury Tours and Travel Private Limited, a travel company based in Singapore. SAIF (SB Asia Investment Fund) is one of its investors.


Future Outlook


Despite some gloomy side of the state of tourism in India, where the number of budget hotels is very, very low as compared to the international destinations such as Pattaya and Bangkok coupled with certain other bottlenecks, such as lack of proper roads and railway networks and poor law and order situation, Kalra is quite optimistic about the future of his online travel portal.  He says that India is the best place in the world to do business at this time, despite its problems including poor telecom/internet infrastructure and low credit card penetration.

Tags : MakeMyTrip.com, Deep Kalra, Future of dotcoms in India, recession, silicon valley, online travel agency,

About Nashaat Quadri

Freelance Content Writer (Compare Infobase, New Delhi.) Ex Sr Content Writer, Western Software, New Delhi. Ex Relationship Manager, Mashreq Bank, Dubai.