On Tuesday, MakeMyTrip, India’s largest online travel company, informed shareholders that Deep Kalra, the company’s founder, would step down as CEO to focus on strategic initiative as executive chairman, effective immediately. He hands over, after a long and eventful 20 years, to Rajesh Magow, chief executive of the company’s India business.
The development marks the end of an era for the Nasdaq-listed MakeMyTrip and for India’s consumer internet and startup ecosystem. Kalra, 51, stands tall as a pioneer of the domestic consumer internet juggernaut that has drawn global heavyweights such as Amazon and Uber, and fostered homegrown giants such as Flipkart, Paytm and Ola.
Not just the consumer internet sector, much of the booming startup ecosystem that India takes pride in today would not have found expression if entrepreneurs such as Kalra had not built the foundation through some extremely trying times.
“This transition will also allow me to devote full time and focus to strategic initiatives for MakeMyTrip, which will include product innovation and expansion, geographic growth, business model innovation, and corporate development,” said Kalra told analysts during an earnings call on Tuesday.
The company closed the third quarter ended December 2019 with a 14.9% growth in its topline at $206.7 million and cut its losses by half to $11 million.
The change of guard has been in the works with Kalra focused on investor management and product ideation over the past year. Over the last few months, Magow has been leading changes and updates on the platform, a clear indication of a succession plan for the company planned over a period of time, people privy to developments at MakeMyTrip said.
Playing the survival game
MakeMyTrip’s successful initial public offering (IPO), a rare achievement for homegrown consumer internet companies even in these times, followed much after the company weathered the infamous dotcom bust soon after it was founded in 2000 to offer ease of booking and deals on hopping flights from the US to India.
MakeMyTrip is unique because it survived the time when other consumer internet ideas couldn’t keep up with India’s macroeconomics and market sentiments.
Bigtree Entertainment founded by Ashish Hemrajani in 1999 and online grocery delivery platform Fabmart founded by Hari Menon, VS Sudhakar, Vipul Parekh, VS Ramesh and Abhinay Choudhari were among a few which had to shut shop or pivot during 2001. Hemrajani relaunched his entertainment ticketing platform as BookMyShow in 2007 while the Fabmart co-founders now run online grocery delivery player Bigbasket.
It wasn’t until 2005 that MakeMyTrip opened up its platform to Indians looking to book airline tickets. Online adoption of ticket booking was facilitated by government-owned IRCTC opening up online train ticket booking, as Kalra has said in multiple interviews, as much as the arrival of low cost carriers in India post 2005.
As group CEO, Kalra also negotiated the buyout of MakeMyTrip’s largest rival Ibibo Group’s India travel business in 2016, onboarding South African internet conglomerate Naspers and Chinese technology major Tencent as stakeholders. In September 2019, China’s CTrip bought out Naspers’ stakes in the company to become its largest shareholder.
Mentor and investor
Kalra is among the earliest cohorts of first generation Indian entrepreneurs in the consumer internet sector, taking the company public in 2010 with a $70 million debut on Nasdaq. An IIM Ahmedabad and St. Stephens alumnus, Kalra is an angel investor in a handful of companies and limited partner in multiple India-focused venture capital funds. His recent bet was in smart parking solutions platform, Park+ founded by former Paytm executive, Amit Lakhotia, during the seed and subsequent Series A rounds.
“He is disciplined to the ‘T’ and from my time at MakeMyTrip I recall his sharp questions during our monthly review meetings,” Lakhotia recalled. He also admits to reaching out to Kalra over email as a graduate from IIM Ahmedabad, asking if he could work with him since he wanted to run a business of his own. Lakhotia helped build the B2B business for the company between 2008 and 2011.
“I remember Deep telling me that they were predominantly a B2C company and could I figure out something on the B2B side as 80-90% of the bookings still happened offline through corporates or travel agents,” he said.
He credits Kalra with two things -- making him take his first flight for a company meeting to Bengaluru and giving him a taste of ESOPs (employee stock ownership plan).
“MakeMyTrip created a lot of wealth for its employees when it went public. It is something I would have never known of had I not liquidated my stocks in 2010. Since then, every company I have joined, whether Paytm or Tokopedia, my negotiations have been more around ESOPs, less around the salary,” he quips.
Kalra has also been an advocate for protecting the rights of promoters in the Indian startup ecosystem and easing the exit route for investors in Indian companies by making it easier for homegrown startups to go public on the Indian bourses.
Kalra has previously spoken about creating a level playing field for Indian startups, which face tough competition from Chinese internet giants making inroads into India. MakeMyTrip is also a member of the consumer internet advocacy group IndiaTech which counts ride hailing platform Ola, hedge fund Steadview Capital and venture capital firm Matrix Partners India. IndiaTech has been lobbying with markets regulator Securities and Exchange Board of India to ease listing norms for Indian startups and allow Differential Voting Rights (DVR) as a class of shares for Indian companies.
Kalra’s new role as executive chairman will allow him leeway to grow in his role as a startup ecosystem advisor and in advocacy.
As discretionary spends slow down in India and the travel sector experiences a slump due to macro-factors including the Coronavirus outbreak, MakeMyTrip will have to fight out the battle in the Indian market with rivals including Ebix backed Yatra in the OTA space and SoftBank backed OYO on the budget accommodation space.
The faith being reposed in Magow’s stewardship will likely be compared to Kalra’s for some time to come.