Shaadi.com’s Anupam Mittal: A Bachelor Finds Success as an Online MatchmakerPublished: May 11, 2012 in India Knowledge@Wharton
Anupam Mittal laughs at any suggestion that he is the worst advertisement for his company. At 39, he is founder and CEO of shaadi.com, the world’s “oldest and most successful” online matrimonial service. (Shaadi means wedding in Hindi.) Mittal himself is a bachelor. A self-confessed “explorer, entrepreneur and eternal optimist,” Mittal started the company under the People Group umbrella with the simple mission of providing “a superior matchmaking experience by expanding the opportunities available to meet potential life partners." The website, which recently celebrated its 15th anniversary, has matched more than 2 million people. By Mittal's estimates, the site controls 40% of the US$1 billion Indian match-making business.
Mittal is candid about the many problems he has yet to solve. “I’ll get married when I solve those problems,” he jokes. In an interview with India Knowledge@Wharton, Mittal discusses his journey, the trials and his dream of matching 1,000 people every day.
An edited transcript of the conversation follows.
India Knowledge@Wharton: You started an online marriage portal at a time when most people in India did not have Internet access. What prompted you to do so?
Anupam Mittal: I was living in the U.S. in the mid-1990s. I was studying there and then joined a company called MicroStrategy, a business intelligence software firm. This was the time when the Internet was starting to boom in the U.S. You’d just had the IPO for Netscape in 1991-1992. The Internet was this incredible phenomenon that was going to change the world. I used to come back to India once a year, during which time I was not doing much. When I was here in 1997, I started doing some web development work for other companies. While sitting in my father’s office, I met one of those traditional matchmakers. He came in, posed as a friend of my father’s, and tried to “suss me out” to match me off. I wised up five minutes into the conversation. But while I was thinking about how to get [rid of] him out, it suddenly struck me that we could put all this on the Internet, take away all the inefficiencies and address the geographical and spatial limitations. And that’s what we did.
In 1997, we launched the first version called sagaai.com. [Sagaai means engagement in Hindi.] It was an experiment. Our focus was more on the web development piece because that was what was earning the money. We put all that money in this business. In 2001, I quit my job in the U.S. and moved back [to India], and we changed the name to shaadi.com.
India Knowledge@Wharton: When and from whom did you get your first round of funding?
Mittal: We didn’t need to raise external capital until 2006, when we decided we were going to invest a lot of money [in the company]. By that time, we had built quite a brand and a decent business. We raised capital from Sequoia, Silicon Valley Bank and Intel. By then, I’d also started a mobile application company called mauj.com. We raised US$20 million between shaadi and mauj.
India Knowledge@Wharton: What is your revenue model? Is the company profitable?
Mittal: It’s pretty straightforward. Somebody comes on [to the site], signs up and puts up a profile -- until then, it’s all free. Then there’s "Person A" and "Person B" who find that they are interested in each other. So "Person A" sends an [indication of] interest to "Person B" by clicking a button. Even then it’s free. "Person B" can then accept or decline [the expression of interest from "Person A"]. Let’s say they accept. Now one of them has to pay to take the conversation further, otherwise they’re stuck. So at a basic level the site is free. It’s only when you’ve found somebody that you pay. It’s a moderate fee relative to what we’re doing: It can range from US$60 to US$400 depending on the service you choose.
Of course, we’re profitable. In online travel, when you sell US$100 worth of tickets, your revenue is actually US$5. US$95 goes to the airlines. When you look at our business model, 100% of the revenue is ours. I don’t have a product cost like Flipkart [an online bookstore] does. They pay 80% of their revenue to a third party. When you look at net revenue, we actually do very well compared to a lot of these people. I do about US$30 million of revenue [each year]. That doesn’t sound a lot in the context of Flipkart, which will probably do US$100 million this year. But 70% to 80% of that [goes to other people] if you consider their margins.
India Knowledge@Wharton: Your investors have been with you for five to six years. When are they planning an exit? Are you looking for a second round of funding?
Mittal: The life of a fund is about 10 years. Our investors brought in money at the beginning of the fund cycle, so they’re fairly patient. Are there conversations around exits? Of course. When you’ve invested for six years, you start to talk about what’s the best way [to exit]. There are several options, we’re talking about them. The business is profitable so there’s no reason to look for another round of funding.
India Knowledge@Wharton: What have been some challenges so far?
Mittal: There have been a lot of challenges. First of all, until about 2005-2006 most people didn’t even understand what we did. It was hard to hire the right people. Even buying advertising was hard. There were cultural barriers -- [people asking,] "Why should I go online to find a partner? You must be desperate to [if you have to go] online." That mentality was a challenge. But by far the biggest challenge today -- and I think it will continue -- is hiring the right people.
India Knowledge@Wharton: You were recently awarded the Karmaveer Puraskar (Award for Social Justice and Citizen Action) under the "Entrepreneur for Social Change" category. What was your reaction to that?
Mittal: We win awards every year and it’s really a testament to our focus and innovation and trying to ensure that we are taking our business very seriously. It’s great for the morale of the team. But I think a couple of things matter. One, are you making a difference. For me, what’s really fulfilling is when I hear a 60-year-old man sent an email saying he had given up on companionship but found a 52-year-old woman living 1,875 miles away. Stories like that those are the high points. They tell me there are a lot of people who may never have found companionship.
The other high point is when I see the people [working] within this company today. We’ve got people who joined us as peons, a couple who were jobless on the streets. They are today doing HTML development, engineering and programming. It is all credit to them because they’ve taken it upon themselves to learn and work hard. But we encourage that and we try to provide an environment that’s conducive to that. These human stories are what make us feel good.
India Knowledge@Wharton: Who is your typical client? What are some popular parameters for choosing a partner on your website?
Mittal: Around 20% are Indians outside the country, but 80% come from within the country. We see people who make US$4,000 a year [and] those who make hundreds of thousands of dollars. That’s why we have services that cater to different people.
You can choose a prospective partner based on 23 different factors, including income group. What is really important is education, religion, age, height, work area and caste. But about 35% don’t care about caste.
India Knowledge@Wharton: Your customers almost always never need to use the site again once they have found a mate. How do you justify customer acquisition costs?
Mittal: It’s simple math -- customer acquisition versus revenue of lifetime customer. Actually, we do better than most other online companies in terms of customer acquisition cost. Our customer acquisition cost is low because we’ve created a brand over several years so we get a lot of direct [referrals], we get a lot of people who click through simply because they know us and so on. We used to do a lot of television advertising in the early years and that serves us well even today. Right now most of our spending is online but we do campaigns from time to time.
India Knowledge@Wharton: How does shaadi.com differentiate itself from other online marriage portals?
Mittal: I think the "USP [unique selling proposition] discussion" is for the early part of this century. I think the world has changed and the way you differentiate yourself today is not through a feature, not through a certain price point -- anybody can copy those. In a world where technology and marketing are so commoditized, anybody can access the right brains. The differentiation comes from being able to have a [unique] personality. It comes from being able to capture space in a consumer’s mind; [from doing something] that is very different from what anyone else is doing. How do you do that? You can’t do that through one campaign or through one feature because that can be replicated. I really have to do it through fundamental values and principles that are imbibed within the organization, and therefore in everyone and in every product feature and in every communication that’s put out there.
India Knowledge@Wharton: But you don’t consider other online matrimonial sites, specifically Bharat Matrimony, as being competition?
Mittal: Well, yeah. They have a slightly different market though. They’re stronger down south; we’re stronger up north. We’re very strong in the [non-resident Indian] market; they’re not. There is competition, of course. And people sign up on multiple sites as well. But I think the biggest competition is the other means of finding a partner like social gatherings, family and other networks. But not so much social media, because social media is structured to meet people you know and not to discover people you don’t know.
We’ve matched about 2 million people so far. Some 10% of the people who sign up find a partner. We would like to start seeing that 1,000 people every day have found someone. Are we the largest? Everybody claims so. It’s very close.
India Knowledge@Wharton: Shaadi.com has extended its services to various platforms such as mobile, television and DTH [direct to home satellite television]. How successful have those been?
Mittal: DTH didn’t work. DTH is for entertainment. People want to watch movies and cricket and that’s it. Mobile is working brilliantly. We’re blown away, every month it’s growing like weeds. I wouldn’t be surprised if in the next 12 months, 20% of all our interactions happen on mobile. That’s quite something.
India Knowledge@Wharton: In the offline space, shaadi.com has launched Shaadi Centers and now has a network of over 100 centers across 87 Indian cities. Why was there need for a brick-and-mortar complement to the online presence?
Mittal: It has to be looked at in the context of what we do. In 2004-2005, every year we used to talk about the inflexion point of the Internet that never really was happening. So we started to think about how we could reach out to people who are technology-phobes, who may never really use a computer and are still responsible for making this decision for their children. We wanted take the advantages of online, which is the reach and the immediacy, and those of offline, which is the trust factor and a relationship, and combine them. That is how we came up with a center model.
It’s been a tough road, I won’t say it's been great. There have been times when the board has said you need to shut this down. But I’ve held steadfast because I believe that the kind of service we are providing is not a standardized product. It’s not an LCD 42-inch TV that I can buy online and not worry about getting something that doesn’t work. This is personalized service and everybody has a different perception of what they want out of it. So there’s a big relationship component. That’s one. The second is that it helps us build incredible credibility and trust, which then translates into more business. This year has been tremendous for us as far as the center business is concerned, it’s growing very well. We’re profitable on that as well just as a standalone business.
India Knowledge@Wharton: You recently launched Angry Brides, an online game modeled on Angry Birds. This has received considerable media attention. What are some other online marketing strategies you plan?
Mittal: I can’t tell you about the other strategies but I can talk about Angry Brides. Look at our engagement levels on Facebook. You can’t buy that. That comes through things like Angry Brides. It is essentially the first step of a movement against dowry.
India Knowledge@Wharton: You have also started two other websites -- makaan.com and mauj.com. Are you looking at more such ventures?
Mittal: Mauj.com started because we spotted an opportunity way before our time to drive mobile Internet usage. And today, with Mobango, one of mauj’s properties, we do about a million downloads a day. At Mobango you can get any application for free across any handset that you have.
Makaan happened similarly. We saw a lot of opportunity in the online real estate space and we still think it’s going to be incredible. It’s going to be a multibillion dollar space and makaan will be a key player.
The reason we launched these sites was because we were at a time where competitive intensity was very low. We didn’t quite know where future growth would come from. So it was a de-risking strategy, if you ask me.
I couldn’t humanly build more Internet businesses. I don’t have the bandwidth and the depth. You find gold by digging deep. It’s the same with Internet businesses. You don’t go broad, you go deep. But I still have a passion for entrepreneurship. So I do a lot of angel investing. I’ve got about 10 angel investments now in very exciting areas.