#IndianStartupData : Revisiting Quikr’s Commonfloor Acquisition [Vertical Vs Long Tail Play]

Quikr's Pranay and Commonfloor's Sumit
Quikr’s Pranay and Commonfloor’s Sumit

Quikr acquired Commonfloor this year in an estimated $200mn deal (mostly stock).

We revisit the deal and numbers – largely, because numbers in this case don’t tell the entire story (and is an important message for founders).

Quikr Vs. Commonfloor : Revenue
Quikr Vs. Commonfloor : Revenue

Both Quikr and Commonfloor had comparable revenue numbers : 53 crores* and 44.4 crores.

Losses anyone?
Well, take a look.

Quikr Vs. Commonfloor : Loss
Quikr Vs. Commonfloor : Loss

Quikr recorded loss of 5X (446 crores) as compared to Commonfloor (86 crores).

Who should have acquired whom?

Clearly, if you look at numbers – Commonfloor fared much better than Quikr and was a better performing company than Quikr. FYI : both the companies started around the same time (Commonfloor in 2007 and Quikr in 2008).

Going by the numbers, Commonfloor should have acquired Quikr and not the other way round?

But the truth is that when you raise funding, as a founder you need to realise that you are entering a treadmill zone – where you need to keep running faster and faster and keep burning / keep raising (you may not have the control on the speed).

Quikr had more money (in the bank/higher valuation) and largely because they had larger ambition than Commonfloor. For Quikr, Commonfloor was an important classified category, even though number wise other categories weren’t performing so well.

Vertical Vs. Long tail

The question here is whether a vertical play (like of Commonfloor, i.e. real estate) makes it a NextBigWhat vis-a-vis a bigger horizontal play which is somewhat lesser impactful, but serves the long-tail?

In the long run, will vertical businesses be forced (by investors) to sell off to (bigger) horizontal plays, which may not be better performer but have better fancy numbers to show off?

What’s your take?

Watch out Sumit’s talk from the last UnPluggd where he talks about the Commonfloor story and the Quikr deal.

Note : These numbers are of FY14-15, which was the prime factor in deciding the merger which happened in Jan 2016.

[About #IndianStartupData : This is an annual series that breaks down the #PRshit of companies to actual numbers and importantly, more useful contexts.]

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