iXiGo Founder, Aloke Bajpai on their Business Model, Future Plans, Funding experience, Entrepreneurship ..and moreMarch 24, 2009 2009-03-24 16:16
iXiGo Founder, Aloke Bajpai on their Business Model, Future Plans, Funding experience, Entrepreneurship ..and more
iXiGo Founder, Aloke Bajpai on their Business Model, Future Plans, Funding experience, Entrepreneurship ..and more
Recently, we asked you all on your favorite Indian travel website and iXiGo emerged the final winner (in total, 1027 votes were polled).
Post poll, we decided to conduct a detailed interview with iXiGo team – ask them questions on their business model, competition, future launches and most importantly, their entrepreneurial journey.
So, here we go:
You have covered bus/hotels/flights – what next for iXiGO? Trains? How are you planning to grow the offering?
Trains is definitely on the agenda. Since there is limited value in comparing multiple train booking providers when it’s common knowledge that IRCTC is the sole inventory provider and its own site sells tickets at the best prices, we are trying to work on a product whose usability and added-value provides a strong enough reason for people to initiate their search for train tickets on our platform and then transact on a site of their liking.
We are also working on the challenge of building connectivity and relationships with all international airlines flying from India in order to take our international flights product (in beta) to the next level and ready to be immersed into the core product. This has never been done in India, and the process is looking similar to what we went through when launching our domestic product – only that international airlines are a lot more aware about working with meta-search engines.
Given that the domestic market’s needs are already well-served by our existing products, we will soon work on some interesting propositions for inbound and outbound travelers.
Without sharing exact numbers, could you please share approx/ballpark amount of transaction iXiGO system closes monthly? And also, %age wise (i.e. flights/buses/hotels etc)
We are generating almost 1000 transactions a day measured across all products, including both the acquisitions through our organic results and the advertising on iXiGO that drives bookings on OTA/Supplier websites. Most of this is flights, with buses being a fast growing category. Hotels is less than 10% by volume, but our referral-to-conversion rates are far superior to other distribution channels, yielding a much better value-add per referral. In terms of volume relative to the industry, our flights engine now powers nearly 2% of online transactions in India.
Basic question : how do you make money? Do you also charge for lead generation (CPC?) or only when the sale is closed?
We make money in two ways – by generating qualified leads, and by running targeted advertising on our site.
Whether we get paid CPC or CPA by the supplier/OTA is immaterial since they differ only by a %age known as the conversion-rate. The more important thing to remember is that unlike an intermediary or distribution channel, iXiGO is helping suppliers build their own direct-selling brand and enabling growth in ancillary revenue on their site. What this means is that typically we can deliver more value per click than horizontal search engines (Google/Yahoo) can, so when you compare absolute per-conversion payouts, iXiGO is by far the most cost-efficient way to acquire qualified travel traffic. At the end of the day, suppliers compare marketing & distribution costs across mediums and put their money where they get the best return on an incremental Rupee, and that’s where our positioning and focus has helped us deliver.
Similarly, for a travel-category advertiser, we provide a means to reach the most qualified audience without any inherent conflict of interest. Do you think Air France, Cleartrip, Akbar Travels, Travelguru can all advertise and co-exist on any other medium? Our conversion rates from these ads have been phenomenal and therefore advertisers are happy to pay a premium to reach to the most qualified travel buying audience. Also for consumer brands like HP, Nokia etc. we have delivered a much better RoI than many horizontal media, because we reach out to the cream of people who can afford a Rs. 10K air ticket or Rs. 20K hotel booking. By building a niche media platform reaching only the most qualified e-commerce buyers in India with high disposable income, we are able to deliver much higher value to advertisers than the same spend elsewhere.
OTAs vs. Infomediaries – Given the downturn, other players (i.e. OTAs) are looking at package travel as a significant source of revenue. iXiGO, given it’s current form cannot get into that – aren’t you losing some market because of your positioning?
Well, first of all, even in mature economies, selling packages, tours, activities etc. online is a challenge, and more so in India. Offline handholding is critical to the sale of these products since the comfort level required for a sale to happen is quite high. The touch-and-feel factor is difficult to replicate online, and many people don’t have credit cards with limits exceeding 50K Rs. – something quite critical for online sales of rich packages to take off.
All said and done, OTAs continue to depend on flights for a majority of their transactions and revenues. What works is cross-selling and up-selling, where two products are bought together, sometimes with a monetary advantage compared to buying them separately. iXiGO can do this too, and we already do – every time you redirect to an airline, we allow you to search for hotels at your destination in one click thereafter.
When the time is right, we will launch a search product for packages and tour inventory, but we feel the market is not mature enough for the product as of now.
3 years from now, where do you see iXiGO? What specific areas/lines of businesses do you have in your mind?
3 years from now, if NextBigWhat.com ran another poll on India’s most trusted travel site, I wish to see iXiGO win by a huge margin yet again! 🙂
You see, as you scale, just maintaining that trust and confidence is the challenge, since there will be a lot more “opportunities for failure” once you have a lot more products and users. So, if we can scale the confidence and the trust among not just consumers, but also suppliers and advertisers, as we scale the usage, there is nothing stopping us from becoming the best at everything else either to get to that, or as a result of that.
To summarize, 3 years out I clearly see iXiGO as the most trusted, most unbiased, most innovative and most comprehensive source of real-time information for ALL travel needs of Indians and visitors to India from across the world. The rest will flow from that.
How do you plan to grow your audience? Thoughts on distribution?
Primarily, we plan to grow our audience organically by continuing to innovate on the product front – by adding more suppliers to our results (our hotel search for any international destination today delivers more results than any other travel site in India), by delivering a faster and smoother search & comparison experience and by giving our users more value-added tools to play around with the sea of rich information they are presented with.
However, this being India, scaling up is sometimes also proportional to where you are seen and how your brand is perceived, since Indians don’t have too many examples of companies that grew in the home market sheerly on their superior value proposition. We will thus continue investing resources into some innovative ways of marketing iXiGO using channels that build a sustainable connect with our audience and make sense financially.
We also plan to have more affiliates, allowing other portals to take advantage of our superior product to grow their travel-related traffic and monetize better from their advertisers. We have seen that companies have been able to tap into a significantly bigger advertiser base and command premium rates after growing their traffic with iXiGO’s search product on their site.
Finally, we see mobile and voice as interesting long-tail mediums to acquire customers on. We already have a WAP search on m.iXiGO.com and soon will launch more interesting applications for phones and voice-users.
iXiGO will almost be 3 years old – do share some of your experience.
Yes. We will turn 3 on iXiGO day – June 3rd. It’s been a very, very exciting journey. We started very small, with 3 computers in an apartment and almost no capital.
In a short span of 2 years, we have seen nearly everything an entrepreneur wishes to see and does not wish to see over his lifetime, all in just one company. There have been a multitude of interesting anecdotes, in dealing with other companies, dealing with potential investors and internally at the team/company level with the amount of support and confidence our team showed in us in difficult times, in fact there is enough to write a book about – I guess your readers will have to wait for that. J
In a way we feel lucky to be witnessing a downturn since capital-efficient companies with strong products will come out stronger on the other end of it.
You raised your first round from BAF Spectrum – any specific reason why you didn’t (or couldn’t) raise the funds from Indian VCs?
This is not my favourite topic 🙂 , but I will not be politically correct as usual.
Angel-groups / Seed / Very-early stage investors in India are still a riddle to me. I met 4 such funds several times over several months in 2007 and none of them even started discussing terms, but all of them continued showing some interest every time we met. On the other hand, I had a signed term-sheet with BAF Spectrum within 4 weeks of the first call with them. So, my experience (which might be biased) is that Indian seed-stage investors end up wasting a lot of the entrepreneur’s time. Seed-stage investing should be about investing in a strong team, a large target market and a nifty product. If our seed investors waste time questioning which approach to take, discussing reasons why you will fail, spending weeks on building financial models and looking for revenue growth, we are never going to fund the next Google in India. In addition, what I have heard is that in India, seed terms look a lot more like VC investment terms, which means the entrepreneur probably does not have much space left after his next round.
The other reason was that since there never had been any meta-search engine in this market, we were being compared on all fronts with OTAs who had all raised humungous sums of money. William (who sits on our board from BAF Spectrum) had been part of Kelkoo, a successful price comparison engine in Europe built with very moderate capital, and therefore understood the capital-efficiency our business model has and the potential impact it can create in a market just starting out in its evolution.
Share some of your bad decisions and some of the kickass ones (that you believe spiraled you into the major league).
Not so kick-ass decisions:
- Using SEM for non long-tail keywords – it’s a black hole where no matter how much you spend, you get very little out of.
- When we started the company, we did some bootstrapping service engagements to generate cash for survival. Sometimes we feel that if we focused entirely on our own product, we could have launched sooner (remember we demo’ed at Proto in Jan and launched in June). That tradeoff is tricky at times, and my advice to entrepreneurs would be to take some incremental angel money if it comes at good terms instead of getting deep into services.
- Very selective in hiring only the best and the brightest, even if they come for a premium. Remember – everything in the world can be replicated – but not the unique strengths of your team. And it reflects in everything you do.
- Sustained focus on the product and the value it offers to users and suppliers. This meant staying unbiased, neutral and non-aligned. There were many times when we have said no to easy money, because those decisions would have created a less valuable product for our users and supplier partners.
- Not spending absurd sums of money on mass media the way others have done. I am sure many of them look back to those days and ask themselves what value got created. The lesson we have learnt is not that we will never use mass media, but if we ever do, the burnt fingers of others remind us that we need to be careful and have a clear objective and sustainable approach to it.
From what I know, you haven’t marketed iXiGO a lot and most of it was achieved via WoM (is this true?) – Share some of tips to budding entrepreneurs.
That’s true. iXiGO has grown entirely by word of mouth.
It’s very simple – products drive word of mouth. The fact that prices on iXiGO are lower than any other travel site in India is definitely helping this word of mouth, but it’s also because of the speed, comprehensiveness and unbiased results we deliver.
We have been very frugal with our marketing spend and our spends in general. We have spent not even 1% of what some of the large travel sites have spent in marketing & distribution, yet we have traffic and transaction volumes that are now comparable to some of them.
My tip to entrepreneurs in the internet space is simple: focus on your product and the value you are generating for your customers and partners. Create such a significantly more valuable product/service that your customers and partners love coming back to you for more. That’s the best way to grow organically with minimal spend.
Of course you will need to seed the word of mouth with your friends and acquaintances, school/college networks, social media, what-have you!
How have you guys (co-founders) distributed responsibility among yourself?
My responsibility areas are business development (building and growing partnerships with travel companies, advertisers and affiliates), finance (keeping an eye on the bottom-line and raising money) and figuring out creative ways to market our product among consumers (I even tweet @iXiGOIndia )
Rajnish, my co-founder and CTO manages the product and technology piece – the heart and soul of iXiGO.com
Yash, our co-founder and COO works on building strategic partnerships, managing operational aspects of all commercial/marketing relationships, keeping an eye on the market & product, relationship building & networking with users & partners, and helps me and Rajnish out on all critical stuff.
Entrepreneurship Tips? What inherent quality in you, worked in your entrepreneurial journey?
Our team’s solidarity and shared vision of creating a world-class internet product helped us start and get to where we are. Also, our frugal start (founders survived without salaries for over a year), bootstrapped history and ability to live with lower capital meant that we witnessed moderate but sustainable growth.
On the product level, I think the inherent quality our entire team has been the ability to think from the perspective of a user, a travel partner and an advertiser when looking at iXiGO as a platform. This empathy shows up in features and attributes on our products.
It was our belief that if you create a good product and a brand that lives upto what it promises, everything else falls into place, and we are seeing that happen every single day.
Finally, the best source of funding and profitability is by delivering value to your partners.
Are you looking to raise next round?
Any entrepreneur who says he/she is not looking for more investment is probably kidding. Yes, we are looking to raise our next round within the next six months, since we feel we have reached a critical mass of users (we are the 2nd biggest meta-search engine in Asia, bigger than older regional players like Sprice and Bezurk), revenue and business-model validation where an opportunity to build a much bigger brand and scale start looking very attractive in terms of strategic value creation.