Sulekha.com is one of the earliest internet companies to be set up in India. It was a start-up before the term became familiar. It was also the first mover in online classified business. Not only has Sulekha survived, it has also grown into one of the top internet companies in the country.
Satya Prabhakar, the founder and CEO of Sulekha, is an engineering graduate from the National Institute of Technology (formerly Regional Engineering College), Tiruchirappalli, who went to the US to earn his Masters in computer science and an MBA in international finance. After working for more than ten years in technology companies in the US, the entrepreneurial bug bit him. Sulekha was launched as a blogging site in 2001 in the US, with just two people. Satya put in his own savings initially. Since then, it has received several rounds of funding.
In 2004, the portal shifted to Chennai and by 2007 Sulekha was launched to focus on local commerce, on people’s transactional needs.
When I met Prabhakar more than five years ago, he told me that his portal attracts more classifieds than the local market leaders in the print medium. In the last few years, the digital marketing scene has undergone many changes. How has that impacted Sulekha? How has he managed to maintain his leadership position? We meet up for breakfast on an early rainy morning at the Eco Cafe in Chamiers, a lifestyle store, to discuss all this and also his very clear ideas about entrepreneurship.
The breakfast crowd is yet to come. We settle ourselves down at the coffee shop after admiring the interesting heritage photographs displayed. Prabhakar asks for masala omelette and toast. I opt for muesli and fruits. He tells me that in 2007 when Sulekha started in India, capital was not freely available as it is today. “A funding round of $10 million was big news. Doing a start-up was not a hot proposition. However, it was much easier to attract talent, market and build a brand.”
Prabhakar believes entrepreneurship is like amateur tennis where you win by minimising errors. “In professional tennis, you overwhelm the opponent. In our business, you stay in the game by minimising errors. Entrepreneurship, especially in a domain like internet/mobile, and especially in a country like India, is very difficult. In the digital domain, change is fast and furious.” He says that one of the reasons for the success of Sulekha.com is that it has stayed focused. “There have been bad years for business. We keep working on our efficiencies.”
Sulekha has tweaked itself several times to keep pace with the fast and furious changes. It started as a platform to connect Indians all over the world. People started blogging to express ideas and opinions. Then it became a platform to trade products and services with classified advertisements. “We realised that small and medium scale business presented a huge potential. Many of the SMBs never advertised through traditional media as their business is very localised. Our platform was just what they needed.”
“In the last three years, we have achieved a key market position by working on both sides of the marketplace. We have developed a viable business model that aligns the interests of users, businesses and Sulekha. We have implemented a nationwide sales and support force.”
Sulekha gets over 20 million visits a month, processes over 10 million needs a year and serves over 4 million businesses listed on the site.
In spite of its continental breakfast menu, the cafe serves excellent filter coffee. It arrives piping hot.
Prabhakar tells me how to survive the ups and downs of business cycles. The boom in start-ups can cause problems to an older company like his. “Start-up economy is quite similar to real estate economy. When there is high optimism of fast value appreciation, everybody wants to invest and prices shoot up. During the bull phase, talent becomes scarce and expensive when numerous start-ups spring up and the cost of marketing rises sharply. The opposite happens when the prospect of price appreciation dims. When companies without a business model are heavily funded and they are allowed to function for long without revenue expectations, it upends the market and makes it very hard for all others in the space.”
Prabhakar tells me how he copes up with this. “Managing the ups and downs of a business requires large dollops of perennial optimism, steely resolve and Zen-like equanimity, all the while running as fast as possible.
Entrepreneurship is like swimming upstream. You must continuously swim, eight days a week. An outcome in any industry is a multivariate equation of several independent variables. Strategy, opportunity, competition, resources, execution, team, culture, market sentiment … all come into play. A lot of this stuff is not in one’s control. Yet being flexible and giving your best all the time are the only ways to maximise odds of success. Even companies as great as IBM, with all the resources and advice available in the world, can go through hell, like they are doing now. Their revenue today is lower than what it was 10 years ago and stock price is at the same level as it was 15 years ago. Look at companies like Nokia, Kodak, BlackBerry, Compaq and HP, and see what they are going through.”
In 2010, Sulekha forayed into e-commerce and decided pretty quickly that it cannot take on the Amazons of this world. “We have been investing quite heavily on technology.”
Sulekha introduced a mobile app about a year ago, which has become very popular, with 50% of business coming from it. “The mobile app has won mBillionth and GMASA awards in the SME category, which are industry-driven and peer-acknowledged.” These awards are given by the New Delhi-based Digital Empowerment Foundation, a non-profit which has been working for digital inclusion across the world and particularly in India, South Asia and the Asia-Pacific.
As we brave the rain and leave the coffee shop, I ask him if he is considering an IPO. “When the time is right,” he says.