In recent times, when Venture Capitalists (VC) are ruling the startup arena by providing piles of money to any idea that comes through their doors and making them cash burning machines, there are still companies that are keeping it low-key and building ‘cash cows’. Info Edge is one such company. The humble parent of four famous offspring: Naukri, Jeevansathi, Shiksha, and 99acres. From being one of the earliest internet firms in India which made the classifieds appearing in newspapers digital, to being valued at more than $4 billion today, it has come a long way. Sanjeev Bikhchandani founded Naukri, the job search portal, in 1995 when he observed while waiting for an interview that candidates are always circling classifieds in newspapers. Since then there has been no looking back for him. They have expanded into matrimonial (Jeevansathi), housing (99acres), and education (Shiksha) - making its presence in the four most important decisions in any person’s life. What made these startups different from the current startups, which spend so much on customer acquisition that they don’t have enough left for their own survival?

Info Edge, it seems, has mastered the maths of running online classifieds in India. Industry observers attribute this success to the fact that customers don’t pay anything to use these platforms, except for Jeevansathi. From listings of jobs, real estate, and education, the company earns most of its revenue from businesses, advertisements, listing fees, and subscription products. This is in sharp contrast to the likes of OLX and Quikr, where a customer has the option to buy a paid listing, but the vast majority of users don’t pay to have their products listed; consequently, they have also burnt through millions of dollars to acquire new customers. However, Info Edge founders do not believe in this philosophy.

The country’s largest employment website, Naukri, boasts about 67 million résumés and currently has 500,000 job listings on its platform. More than 60% of its revenue comes from the fees it charges from employers for access to its huge résumé database. 99acres, another successful venture of the Info Edge brand was founded in 2005 and is also a leader in its category. As of December 31, 2019, the site had total listings of 1,004,378 properties. It competes with Magicbricks, Commonfloor, and Housing. However, between 2013 and 2016, VC funding was abundantly available, triggering a mushrooming of players in the real estate sector. Backed by the likes of NewsCorp, SoftBank, and Tiger Global Management, startups such as Proptiger, Commonfloor, Housing, Quikr, OLX, Indiahomes, and Indiaproperty started giving 99Acres a tough fight. However, 99acres has held its ground. Jeevansathi is the third-largest matrimonial site in India, after Bharat Matrimony and Shaadi. Online spending on the business is likely to grow to ₹11-12 billion by 2023-24 from ₹7-8 billion in 2020-21. This is expected to give a huge boost to Info Edge’s matrimonial website. Shiksha, the portal providing information on careers, examinations, colleges, and courses is facing stiff competition as there are a lot many major players in the EdTech sector. With the likes of Byju’s, it has become tough for Shiksha to make a strong presence in the Indian EdTech sector.

Bikhchandani had seen potential in classifieds websites when there were just around 14,000 internet accounts in the country and a few thousand users comparing that to the around 500 million users in India now, second only to China’s more than 800 million. It became the early mover in the internet economy, taking many essentials online as India’s population started discovering the joys of a virtually connected world. But as an early mover, Bikhchandani knows the downside of the treadmill. He is aware of the need to continuously make innovations in the fast-changing technological world. For that, Info Edge will leverage its advantage of two decades’ worth of data, using artificial intelligence, data analytics, and machine learning to drive informed change through improved user experiences and new products. Also, Info Edge will continue its 12-year-long practice of investing in ‘ideas’ with the ₹1 billion ‘Info Edge Venture Fund’, launched in January, to fund early-stage startups across categories.

This may be the first fund by Info Edge, but the company has already invested ₹1.03 billion in 16 startups, including the likes of Zomato and PolicyBazaar. Overall the company has 21 active investments worth ₹1.108 billion at the end of 2020-21. In fact, one of its most successful bets has been restaurant aggregator and food delivery platform Zomato. Bikhchandani, a foodie, had been using Foodiebay (rebranded as Zomato only in 2010). A subsequent conversation with founder Deepinder Goyal set the tone for a business association, and Bikhchandani made an initial investment of ₹40.5 million. Its investment till date is ₹1.52 billion with about 22.7% stake. Zomato has already successfully acquired Uber’s food delivery business in India, Uber Eats. Moreover, PolicyBazaar is expected to receive investment from Google in its bid to expand its digital presence in India. Additionally, the insurance aggregator is also expected to raise $500 million from its Initial Public Offering (IPO) sometime next year. So the prospects of Info Edge cashing out big are right around the corner.

While making investments, Bikhchandani not only focuses on the business model but also takes into consideration the commitment, capability, and integrity of founders, and good governance. The importance of these qualities can be understood when fiascos like WeWork and Wirecard occur. Of course, some of the newer business models ask for cash burn to gain market share which is not how Bikhchandani runs his companies. He has always advised startups to get ‘customer money’ before ‘investor money’. Maybe some of the larger funds can learn from this strategy instead of blindly burning cash.