Matching frugality with aspiration

Murugavel Janakiraman is casual and relaxed. The successful IPO of the consumer internet company he founded, a matrimony match-making website – Matrimony.com – sits lightly on him. He remarks that the listing is just another milestone in the company’s long journey. He is obviously excited about his achievement. He didn’t even dream that his venture would come this far when he floated the company 17 years ago.

“We are the first internet company from South India to get listed and the first consumer internet company in the country to get listed,” he says, with obvious pride. “We have come a long way,” he says and quickly adds, “we are quite excited about the journey ahead.”

He points out that you have to always keep renewing your aspirations, your goals. So, what goal has he set for himself? “We want to be a billion-dollar revenue company…I don’t know by when. But that is the goal. There is no fixed timeframe,” he replies, sitting in a conference room named Pacific, with a wonderful view of Chennai’s beach, from Matrimony.com’s 10th floor office.

Never did he imagine his business of match-making online would grow this big – revenues of over ₹300 crore – and be profitable, attracting global venture capital firms along the way and finally getting listed, giving a full exit for one of the investors. Matrimony.com Ltd, of which Murugavel is the Founder and Managing Director, raised around ₹500 crore in a public offer of shares in September.

He remembers those days in the US when he was running a community website and the time when Sabeer Bhatia sold Hotmail for about $300 million. Will I ever be able to create that kind of a success, he thought to himself then. Now, his company is valued at more than that and he says triumphantly, “when I look back, I have done it. At that point of time, it looked a distant dream.”

Murugavel remembers his background – son of a port worker, living in one of the alleys in Royapuram in north Chennai. He wanted to study BSc Chemistry because an uncle suggested that a chemistry degree could help him get a job as a lab technician. That is all he aspired for then. But as luck would have it, instead of a Chemistry degree, he graduated in Statistics and went on to do an MCA. That, says Murugavel, changed his life. “From that kind of a background, we have created a company worth a few million dollars now, a profitable internet company by raising just ₹99 crore. That will probably motivate many people that they can also be successful,” he says.

According to him, his company raised its first round of funds in 2006, six years after it started operations. Till then, it was completely bootstrapped. From the beginning, Matrimony.com has been a paid service and Murugavel ploughed back into the business whatever money it earned.

“We grew in a frugal way.” Entrepreneurs now, he says, seem to think money will be available endlessly. They need to understand this will not be the case. That is when they will face their real challenge – how to grow the business without having cash to burn. He admits that it is a different ecosystem, one where entrepreneurs are banking more on investor money to grow their business. Murugavel appreciates the drive that the current generation of entrepreneurs has, especially since they are able to scale up rapidly.

Is there a lesson for entrepreneurs in the way he grew his business, that too by raising just ₹99 crore from investors? “Today’s scenario,” says Murugavel, “is different from what it was 17 years ago. For me, there was no question of funding; it was not even available.” It was because of this that Matrimony.com was completely bootstrapped. Right from the beginning, the operations were frugal and customers had to pay for the service. In contrast, many internet companies offered their services free; they were focussed only on the traffic.

There is now so much of venture capital and private equity money available that entrepreneurs are under pressure to raise funds, sometimes more than what they really need. In the process, maybe some wrong decisions get made, says Murugavel.

A company that had raised limited capital may have survived; if it had raised a lot of money, it will burn much more than what is really required for the business, he points out. The tipping point, he believes, was in 2010 when investors saw the huge success in the Chinese internet ecosystem and believed India was the next big market. Funding rounds of $10-20 million became common.

Today, says Murugavel, it is difficult for an entrepreneur to raise only limited capital and create a large company, because time is the essence. In his case, time was available, but money was in short supply. “We had the luxury of time; today entrepreneurs have the luxury of money. We had the time, they don’t have the time. They have the money, we didn’t have the money. That is the difference,” he says.

Matrimony.com has had investors such as Yahoo!, Canaan Partners, JP Morgan, Bessemer Ventures and Mayfield putting in money at different times. It raised money from these investors in two rounds. Murugavel had also diversified into other dotcom ventures – those dealing with used cars, property, jobs – which have either been shut down or sold. Murugavel is candid when you ask him what prompted him to start these ventures. “It is immaturity. I thought growth means you go after other verticals. We thought we had become number one in matrimony, let us go after jobs, property, automobiles and loans. We went for horizontal expansion, different verticals. I realised that every vertical requires capital, management bandwidth and focus,” he says.

In 2008-09 after the global financial crisis, Murugavel was under pressure from his investors to not put in more money into the other verticals. Some he had to close down even though he was passionate about them. In one, he brought in other investors and he is only a shareholder now. He also realised that within the matrimony domain itself, there are many opportunities waiting to be tapped. “There are adjacencies we can focus on, so we bring natural synergies between the main business and the adjacent business,” he adds.

He surprises you when he says that though Matrimony.com has a 60 per cent share of the match-making market, only 10 per cent of the market opportunity has been tapped. Around 60 million people are looking for life partners in India and the number that has come online is only six million, all matrimony sites put together. “We have a phenomenal opportunity to grow in the match-making business.” He also reveals another nugget: tier-3 towns account for 40 per cent of profiles and tier-2 towns 30 per cent. “Bharat is coming online, into Bharat Matrimony,” he exclaims.

According to him, the margins in the match-making segment of his business are healthy – at around 30 per cent in the first quarter of this financial year – and have been growing every year. Any incremental revenue in this segment will only flow into the bottom-line, he says. Besides, Matrimony.com has high-paying services such as Elite Matrimony and assisted matrimony. Wedding services, bazaar, mandaps and photography are the other adjacent sectors that Murugavel believes can be tapped into without too much investment and effort.

The wedding services business alone is over $50 billion in size and highly unorganised. Matrimony.com will expand this business. “Grow in match-making and expand in wedding services. We have enough to focus on for the next so many years,” he adds.

He says an IPO is an important milestone in any entrepreneur’s and venture’s journey. As far as his company is concerned, its growth has only been through organic means and its visibility was limited. Murugavel believes that the IPO gives him the visibility, exposure and liquidity to hire talent from outside and go in for acquisitions. Personally for him, Matrimony.com holds a special place as he found his wife through the site.

What does the IPO mean in his process of evolution as an entrepreneur? This is version 3.0 of Matrimony.com, he replies. Matrimony 1.0 was when he started the company and getting to the first round of fund raise. Version 2.0 was from fund raise to creating a successful and profitable company to get listed.

“Now, 3.0 is when we have a larger number of shareholders and canvas. From here, institution building and creating a billion-dollar revenue company. That is a different journey, different company, different stakeholder expectation. I need to continuously evolve. The way I have grown from a programmer to an entrepreneur to a CEO, and now a listed company. Learn, improve and evolve. Keep the aspiration high,” says Murugavel.

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