Founders need to look at how much money they make after all the variable costs and performance marketing and that number needs to keep improving: Bajpai
Bajpai advised founders not to penny pinch on employee experience or customer experience as sometimes many companies go overboard in cutting corners
During TMS 2023, the founder delved deeper into how to build the corporate culture and hire like a cockroach startup
According to online travel startup ixigo’s cofounder and CEO Aloke Bajpai, the growth of total contribution margin is the only growth worth chasing.
“GMV, revenue… do not mean anything. Look at how much money you make for yourself after all the variable costs, all the performance marketing, and that number needs to keep improving,” he said, speaking at Inc42’s The Makers Summit 2023.
During the session, Bajpai stressed the fact that being a cockroach startup requires one to have financial discipline and that ‘muscle builds over time’.
He explains that looking at the contribution margin will help you understand the pace of growth. “You will understand that if you will grow your fixed cost at a lower pace than that growth, you see what is called operating leverage and the EBITDA margin improving,” he said.
Interestingly, Bajpai reveals that they have a daily P&L sheet.
“We built this in May 2019 and we started adding daily P&L in cash flow to that sheet. It’s a painstaking exercise but over time you will see that tracking just that single metric every single day, helps it to improve. We improve what we measure,” he added.
Two key points that Bajpai highlighted to build financial discipline are:
- Spend as if it’s your own money, and build a culture of accountability for every rupee
- Don’t penny pinch on employee experience or customer experience – look at it as an investment
Bajpai shared that sometimes during a cash crunch, while companies halve their marketing budgets, they also stop giving basic amenities to their employees.
“Reduce your marketing budget a little more and I am sure you can take out money for the [employees] lunch. We have continued free lunches for our office employees for 15 years. That little care means a lot for the team,” he said.
During the session, Bajpai also delved deeper into how to build the corporate culture and hire like a cockroach startup.
