For somebody who hasn't had an 'entrepreneur in the family for 100 generations', VSS Mani has done pretty well for himself. As has his company, Justdial. The stock market has been notoriously indifferent to India's internet entrepreneurs who go in for a listing. Mani's Justdial is just the third internet-venture-going-public to get a rousing welcome - its IPO was oversubscribed 10-fold, raising Rs. 919 crore. The other two, of course, are Deep Kalra's MakeMyTrip and Sanjiv Bikhchandani's Info Edge.
But why are we talking internet about a phone enquiry service company? Isn't Justdial a local search firm that helps people out with information through phone calls and short messaging services? Even its TVCs have brand ambassador Amitabh Bachchan spelling out just the phone number.
There is a big reason. During the period April-June 2013, Justdial reported jumps of 31 per cent and 148 per cent for PC-based and mobile internet searches respectively, over the corresponding period in 2012 (see chart). The latter, in fact, has been doing remarkably well.
How Mani made money
A 300 sq ft garage in Malad, Mumbai, borrowed equipment and rented computers and an idea was all it took Mani to set up Justdial in 1996. The vision, he says, was to provide people with information in the fastest possible way. Earlier, the entrepreneur-in-the-making had chucked up his job as a salesperson for United Database in 1989, set up A&M Communications and three years later, gifted his shares to the partners and, at age 29, went on his way to build Justdial.
"At that time, the advanced way of delivering information was over the telephone. Directories and yellow pages would take time to reach people. We started with fixed line and then as the telecom boom happened, rode the mobile way," says Mani. How does Justdial work?
While the basic listing is free, those wanting their names to come out tops have to subscribe. Paid listing is split into three categories (platinum, gold and silver) and packages can be weekly, monthly, quarterly or annually. Conversions were hard to come by initially, but trickled in steadily, although the percentage of paid to total subscribers is still very low - just 2 per cent. Paid subscribers grew from 62,000 in March 2010 to 206,500 in March 2013, while total listing rose from 5 million to 9.1 million. "In the early days, we went door to door trying to convince hard-nosed businessmen to take our service. After a year or two, they would call us back enthused by the quality of our services, asking for more," recalls Mani.
A silver subscription that costs Rs. 2,000 a month is a plain listing where the company's name is thrown up randomly. Gold, at Rs. 5,000 a month, ensures that the company's name is on top in at least the first three enquiries. Both customers get an SMS from Justdial about the enquiry.
Platinum, on the other hand, is a custom-built offering that determines the fees after studying the subscribers' needs. Each of the premium subscriptions comes with a JD-verified stamp. Mani fancies the company's chances as the internet opens up more and more. "We see a huge opportunity due to the mushrooming of internet-enabled smartphones for as cheap as Rs. 5,000 at the lower end," he says.
For long, Justdial firmly stuck to voice-based services. Although, it did 'flirt with the internet' in the early 2000s, the dotcom bust-up meant this flirtation did not last long. "Another reason is that if we put our database online, we ran the risk of bigger competitors or wannabes copying the data. But finally we took the decision of not being bothered by these threats and being where our users will come from the most, in the future. I personally led the coding team and developed a robust, secure website," Mani informs.
Internet penetration was not great back then, so the company decided to concentrate its energies on the voice-based search platform. Today, however, the company is betting big (it set up a full-fledged website in 2007) on the potential for growth in both internet-enabled smartphones and broadband Internet services.
As small businesses gradually became interested in listing their business information online, Justdial concentrated on expanding the information spectrum with visual and rich media content. It introduced new features to stay different - and ahead. Businesses with a paid listing status can upload images, videos and brochures of what they offer in the search results page; reviews and ratings allow users to submit feedback on the website; and with Tag-Your-Friend, users recommend their reviews to family and friends.
Monetisation is one problem that most entrants face and online strategies are drawn up separately to deal with it. Mani, however, has an interesting take on this. "That's a wrong way to sell online. The brand remains the same and should be bundled together for monetisation. I have seen companies struggling to monetise their online presence just because they try to sell it separately."
Then there is a clutch of competitors with big daddy Google leading the pack, followed by Infomedia Yellow Pages, Getit Infomedia, Sulekha.com and Askme.com and their ilk. Speculation has it that Google might plan to develop local search platforms and earn from local companies for its next leg of growth. In a recent interview, Google India's managing director, Rajan Anandan, was quoted saying that Justdial is the market leader in local search in India and that they do compete.
Mani thinks not. "For us," he explains, "Google is an enabler, not a competitor. They are internet search specialists and we see Justdial results also showing up on Google. They are not rivals unless they get into specific local search verticals. Also, we believe that our local know-how and relationship with SMEs enable us to offer relevant and better products and services."
Sulekha and Askme have been around for quite some time now in the digital domain while Infomedia and Getit have started looking at this medium very seriously. Doesn't this worry Justdial?
Mani shrugs it off. According to him, Justdial is the leader. "Our internet, mobile, voice and SMS search services are better positioned to provide convenient and speedy service to satisfy our users' needs and preferences. We are way ahead of our competitors in numbers as well as services," he claims.
Today, Justdial gets more searches online than offline. However, most of the monetisation happens offline through lead generation. The time, feels Mani, has come for Justdial to go beyond search and introduce the theory of search and transact. It is all set to unsettle vertical players on the internet with plans to enter the transactional business. As Mani puts it, people today look for more ease and comfort while buying products or availing services.
Justdial's model might just find more takers who would not like to go to vertical specific sites any more. "Make lives easy for the consumers, they flock to you and more the traffic, more the revenue and the more we benefit," he asserts, adding that this is a tremendous opportunity to scale up Justdial. "For example," he says, "if someone searches for information on a movie, the next logical step he would take is to book tickets for that. So why not provide the opportunity to him here? The same theory works across businesses like restaurants, hotels and doctors."
Walking its talk, Justdial added an online food delivery service in August. It is, at present, live in 16 cities. The service provides an option to place an advance order (up to six days) and also allows users to set a delivery time. The restaurant carries out the last-mile execution. For every booking made on its platform, the company charges a commission from the restaurant. But, competition in the form of a Zomato or a Burrp can throw a spanner in the works.
Justdial claims that the response has been encouraging. Coming up in the near future is a range of other services, including online cab booking, movie ticket booking and doctor appointments as additional streams of revenue, among others. Will advertisers follow?
"Around 70 per cent of our traffic is online today, but most of our advertisers have not got there as yet in terms of online adoption. Basically, they care less about which medium a lead is coming from, but as they see a lead converting into a transaction, they gradually realise the potential and are ready to invest more over a period of time. And it helps them more, because if I had to answer all these calls non-digitally, I would have charged 3X more than what I am charging them now. Internet and technology help small businesses gain an upper hand in the market," Mani opines.
Search is one tough business to be in because if once a consumer gets dissatisfied, he will never come back. "It is an execution business and probably that is why we don't have strong competitors," says Mani, pointing out that Justdial doesn't have competition in its category.
Justdial posted a net profit of Rs. 28 crore during April-June 2013, up 69 per cent from Rs. 16.6 crore in the corresponding quarter last year while operating revenues were Rs. 104.6 crore, up 28 per cent from Rs. 81.7 crore in the previous year. This was the company's first financial declaration after it went public.
Experts believe that the move to go transactional will result in its stock price rising. "Fewer Indian youth will be accessing the Justdial service for voice calls. There is a fair chance of the company performing well with its new modus operandi and it is already being reflected in its high stock price," states SP Tulsian, CEO of sptulsian.com and an independent stock analyst.
However, Mahesh Murthy, managing partner of Seedfund feels that Justdial as a company will face monetisation challenges. "Much like a Google faces challenges as it expands into other business domains (Google Plus versus Facebook, Google Local versus Yelp) or as Facebook expands into local updates (Facebook Places versus FourSquare), Justdial will not find the going easy as it takes on other domains. Justdial's move into dining will not be a walk in the park owing to competition like Zomato and Burrp. As also the move into movies or events - they won't find it easy going against a BookMyShow, for instance. For outsiders, segment domination is even harder than monetisation," he explains.
Murthy sees other problems too. "At best they'll be long-slog businesses, needing significant resources and time to build businesses against sharply-focused competition," he opines. Justdial, meanwhile, continues to move on merrily.
With all these new services, will one get to see a new set of advertisements where Bachchan is seen asking people to log on, and not just dial a number?
"Wait and watch," is all Mani is willing to say.
A Note From the Editor
I have realised that there is nothing like a 'settled' business, especially in the service sector. However well established a firm may seem, there is always some change at work which might unsettle it. Often, that change is technology. The question is: when the wave does come along, will the entrepreneur ride it or let it swamp him?
I have enjoyed reading about entrepreneurs long before I became one myself. Even within this breed, VSS Mani would occupy a special place because he has managed to ride extreme change.
When local businesses were listed in directories and yellow pages, Mani decided that these were too static and tried something that was revolutionary at that time; a voice based search which he set up in 1996.
He persuaded rupee-pinching local businesses to advertise on his listing service, Justdial - and he delivered. But even as he was building up his business, internet penetration was rising, especially in the larger cities. As more and more people began to turn to the internet to find local suppliers, Mani could no longer ignore it.
In 2007, he finally went online in a big way. Several local listing sites existed but Justdial managed to brush them off. More than competition, though, the issue was monetisation. Could he follow the same model of free listings punctuated by paid ones to make money online?
And now the mobile internet has come along - again changing the nature of Mani's business. In the first quarter of 2012-13, internet queries had just overtaken voice search in numbers on Justdial. Two years later, there were two internet queries for each voice search. The mobile internet is notoriously difficult to monetise for content businesses. Mani seems to get around that by bundling his various offerings, arguing that the brand remains the same.
Mani is now embarking on a fresh adventure. He wants to go beyond advertising and use the millions of people who use Justdial as their local search engine to guide them towards online transactions. To begin with, users can book meals from local restaurants on Justdial. Other services will follow.
With specialized online aggregators already well entrenched, Justdial will have many battles to fight. Whatever the outcome, no one can accuse Mani of sitting on his hands while change swirled around him.