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From Malamall’s Bust To MartJack’s Multimillion Dollar Exit: Abhay Deshpande’s Entrepreneurial Baptism By Fire

From Malamall’s Bust To MartJack’s Multimillion Dollar Exit: Abhay Deshpande’s Entrepreneurial Baptism By Fire

Sometimes life is about risking everything for a dream no one can see, but you.

There are only two things Abhay Deshpande, who founded India’s first marketplace way back in 1998, regrets the most.

One, he wishes he had started Malamall in 2008 instead of 1998.

Second, that he could bring back the time he did not spend with his eldest daughter in her growing years due to his total involvement with Malamall. So much so that he wishes, “I would want my daughter to be five years old again.”

But besides these two grouses, Abhay does not want to change a single thing about his draining yet entertaining journey in building India’s first marketplace in the days when people were asking questions like “What is the Internet?” never mind comprehending ecommerce, altogether.

He does not want to change the fact that on day 2 of his marriage, he was working till 2 am, or that he never took holidays for 17 years, or that his friends – working with TCS and the likes – had bought flats and cars while he struggled to own a home and drove his secondhand car. He is comfortable with the fact that he often he had to sell old newspapers to pay household bills and that he was thrown out of his rented accommodation for not being able to make rent on time, or that he defaulted in paying his daughter’s school fees, twice.

Not to mention the countless times he was cash-strapped to pay salaries of his employees or the times his phone/Internet connections were disconnected due to non-payment of dues.

And why would he want to otherwise?


“Because in life, I only understand ecommerce and mobile Internet. I don’t really understand anything else. If somebody gives me 10 petrol pumps to run in Hyderabad, I might not be able to run them,” Abhay begins, with touching candour.

Because in life, I only understand ecommerce and mobile Internet. I don’t really understand anything else.

And that’s why this Computer Engineer from Nanded, Maharashtra, chose to chart the untrodden path, something unheard of in his Brahmin, middle-class family populated with government servants whose idea of a job did not stretch beyond the nine-to-six cycle.

The Karachi Bakery Biscuits And Naseeruddin Shah Connection

While Abhay mulled about becoming an entrepreneur right from his college days, he wasn’t sure on what exactly he wanted to start up. What he was sure of was not working as a software developer in an IT company, something which many of his friends aspired for. So, after he passed out of engineering college in 1995, he moved to Mumbai where his father was stationed as a Secretary to the Maharashtra State Government and joined a friend’s company.

The firm had developed billing software for retailers and he joined the business development team. The business was a decent one and the firm wanted to start expanding it to the South. That’s when Abhay started frequenting Hyderabad to sell software in that part of the world.

He used to travel in trains from Hyderabad to Mumbai and, during the journeys, he noted that a lot of passengers would carry the famous Karachi Bakery biscuits from Hyderabad to Mumbai for their friends and relatives. In fact, many of his friends from Mumbai who were Hyderabadis would request him to carry special delicacies from the region as well.He realised there existed an opportunity here as speciality products were only available in a particular city.

“Those were the days when businesses used to advertise and proudly proclaim that they have only one branch. I thought that here are so many such speciality products of so many different cities which Indian consumers would want to consume. That is when the whole idea of ecommerce came to my mind.”

After working for two years with his friend, who subsequently shut shop, Abhay started working on the idea of this marketplace.

He was watching Naseeruddin Shah’s 1988 comedy flick “Maalamaal” when the thought of naming the ecommerce site as Malamall struck him! So he bought the domain name, and with a three-member team, started building the ecommerce website.


“I only wanted to start with ethnic products. Malamall was the first marketplace in India where one could find all these retailers who made speciality products – be it eatables or fashion or apparel. I aggregated those products in one place and made them available to any part of the world,” he explains.

Founded in  Hyderabad in 1999, the firm also managed to rake in an initial angel funding of INR 30 Lakhs then, followed by another round of $147K (INR1 Cr) from a small fund called I2DC( ideas to dotcom). But while initial funding may have been a walk in the park, ecommerce at that time was a different ball game altogether.


Of Excel Sheets And GMVs: Challenges Of An Early-bird Etailer

Those were the days when no one understood ecommerce – be it VCs or logistics companies. In fact, when Abhay spoke to logistics firm Gati, they actually enquired – what is ecommerce? Nevertheless, Abhay’s ambitions remained unhindered.

He laughs as he reveals, “My business plan on the Excel Sheet was a big one. In 2001, I was supposed to do half a billion GMV (INR 33 Bn) whereas in 2001, the entire ecommerce market in India was $147 Mn (INR 10Bn)!”

Despite his over-ambitious plans, Malamall still managed to get decent traction. With 300 brands across 27 cities, it claimed to have received an average of 80-100 orders per day from the country and roughly 100 orders from NRIs also. This meant that while the NRI portion contributed to high margins, the scale required for the business to succeed was missing.


This is understandable given the low Internet penetration, low credit card penetration, and lack of payment gateways back then. In fact in its initial days, it solely relied on international payment gateways such as CCNow, as there were hardly any Indian players around. It was only later when ICICI launched its payment gateway in the early 2000s, and Malamall was one of their first few customers.

Similarly, online tracking was an alien concept at that time. However, logistics was manageable given that Bluedart was sufficiently equipped to handle the load given that there were only a few players such as Rediff shopping and Indiatimes.


Another challenge that beset Abhay was that he had no clarity on how to hire people or rather how not to hire people.

Abhay says, “I hired my friends and cousins thinking they understand me but that was a mistake. I realised later that if you want to build a valuable business you have to hire the right talent. You do not go into hiring friends and relatives.”

Nevertheless, the first few months were still decent. There were willing investors. As he recounts, “I2DC wanted to invest INR5 Cr but our angel investor told us we take the required INR1 Cr and after one year, raise money at a higher valuation. I also received acquisition offers from a Mumbai-based firm for INR2 5 Cr, when Malamall was still an eight months old company with 12 people and a GMV of INR 50 Lakhs.”

From Boom To Bust: Malamall’s Time Of Crisis

But the 2000 dotcom bust changed everything, completely.

All offers of acquisitions or funding evaporated into thin air, just like so many other dotcom companies.

Cash-strapped, almost INR5 Cr in debt, struggling to pay employee salaries, and clear vendor dues, the firm had to move from a somewhat decent office to a flat again. Large scale attrition followed, with the team reduced to 20 people, one-third its former size. For Abhay, it was a year of reckoning.

“I had two options- either close down the company and join somewhere else or continue Malamall as long as I can. But I did not want to close it and hear from people that I left my employees and my vendor in lurch. So I decided to continue it, control my costs, and solely focussed on it from 2001 to 2006.”

I had two options- either close down the company and join somewhere else or continue Malamall as long as I can.

As Abhay tells it, it was the toughest time of his life. Living under financial duress and subjecting his family to the same pinched him but he soldiered on. With unwavering support from his wife and his parents, Abhay was able to steer Malamall away from debt and managed to pay off INR 3 Cr in those five years.

“Due to my persistence, people realised that I am not a guy who will run away,” he recalls. He would never shirk from answering the calls of his debtors or meeting them. Every year, he would diligently pay off INR 50 Lakhs-INR 60 Lakhs of the total amount, which hardly left any funds for him.

He jokes, “Having spent eight years in ecommerce, knowledge-wise I had become maalamaal but not money-wise.”

But five years later,  in 2006, things started getting back on track.

MartJack: Changing Gears From Ecommerce To A SaaS Business

By 2006, the market had begun to change. Abhay recounts that many of the brands who were on Malamall started asking him for options to start their own ecommerce site or store. That’s where Abhay sensed another opportunity.

He explains,“I understood retailers and their challenges with technology. They don’t understand or value it, but at the same time they want the best in technology. They are most reluctant to buy software.”

With this understanding, came the decision to close Malamall and focus his energies on his next venture – MartJack, a multichannel platform built on a subscription model which would allow retailers to build their own ecommerce portal and manage end-to-end ecommerce operations. By the end of 2006, he started offering his old shareholders shares of the new company.

MartJack was launched in May 2007 in Hyderabad.


He says, “I realised, in 2006, that though the ecommerce boom had begun, it would still take its own sweet time. In that respect, even MartJack was three years ahead of its time. But at least I made some progress as earlier I was eight years ahead of time!”

Which meant, creating yet another Excel sheet. Abhay envisioned onboarding 100K businesses in India in 2010, paying the nominal price of INR 300 per month.

With Malamall, he had learnt not what could be done in business, but what should not be done in business. And one of those lessons was about the importance of technology.

As he explains, “I realised during the Malamall years that technology is one of the most important concepts of ecommerce. Retailers never get access to great talent, as talented folks prefer bigger brands over joining a midsize retailer. Hence, retailers are always in need of a quality platform where technology is being taken care of by someone else and they can focus on their business. That was the idea behind MartJack. The pain that I went through in my first venture made me realise that every retailer might go through the same pain because of technology limitations.”

MartJack enables retailers to build their own e-stores without any capital investment and allows them to scale as per their needs. The fact that Abhay had already burnt so much money in the consumer Internet business and understood what merchants exactly needed, further helped the cause.

Thus, the initial focus was on helping the millions of SMBs in India. In that direction, the first version of the product itself was priced at INR 2,999 per year. The version took 1.5-2 years to build. Whatever mistakes Abhay had made while building Malamall, he tried to rectify with MartJack. Hence, the focus on hiring the right people and building the right team, which helped it survive in the initial years.

Enterprise SaaS, 85 Angel Investors, 135 Cheques: The MartJack Story

2009 was the year when MartJack started getting good traction. And that happened due to one customer – Gitanjali Gems.

Gitanjali happened to be MartJack’s first enterprise customer, which opened another door of opportunity for the SaaS firm. This was because, till then, only smaller merchants were its core clientele. While it claimed to have onboarded close to 2,000 merchants till 2012, Abhay realised that enterprise SaaS was where the big opportunity lay. Hence, in 2013, the firm changed gears to focus on enterprises only.

And that became the tipping point for the startup.

Bigger clients fell into its lap – from Future Group to Walmart India, and some 15 super clients. By the end of 2013, MartJack had transformed into an enterprise platform, growing from a 30-member team to a 150-member enterprise.


What was more interesting was also the way big money flowed MartJack’s way. Abhay recounts that the startup raised INR 42 Cr through 85 HNIs in total spread across 12 countries and 32 cities!

He jokes, “If we had continued MartJack for three more months (before selling to Capillary Technologies in 2015), we probably would have been the first private company in India with equity from 100 angel investors!”

So, long story short, MartJack ran for 100 months with the investor money coming in 135 cheques!

1+1=3: CRM + Ecommerce = Acquisition

It was at the end of 2014 when the conversation with software maker Capillary Technologies began. Commenting on why he chose to get acquired, Abhay says the idea was simple synergy.

“We felt that Capillary is in the CRM space and we are in the ecommerce space and our end target customers are the same. So the idea was, can we do 1+1 =3?  We wanted to come together in the hope of doing something bigger together. It was not a distress sale but was a good deal to create a large SaaS firm for the Indian and Southeast Asian market.”

Added to that was the fact that both the teams gelled well as both startups had begun their journeys at almost the same time- with a time difference of a mere couple of months. Capillary Technologies began in 2008 in Singapore. As per the terms of the deal, Abhay, along with MartJack’s 160 employees moved to Capillary and the combined entity became a complete omnichannel.


This acquisition holds definite potential for MartJack’s offerings, given the opportunity that exists in enterprise SaaS today. As per a Google-Accel report, a $50 Bn market awaits Indian SaaS startups. Added to that is the fact that even the investor community is getting serious about it.

An Entrepreneurial Baptism By Fire, A Renewal Of Faith

Abhay feels the same about his passion, ecommerce, as well. He says, “Ecommerce is here to stay and we are very close to the tipping point. Keeping aside valuations, with increasing focus on digitisation, ecommerce is going to be the beneficiary in the next couple of years, though not immediately.”

Ecommerce is here to stay and we are very close to the tipping point.

For Abhay, the journey he started almost two decades ago has come full circle with MartJack’s acquisition. And it has been one hell of a ride for him – from getting married exactly 10 days after the funding,going back to work the next day, taking no vacations for the last 17 years, being in debt, going bust, resurrecting, and starting over and succeeding beyond his wildest dreams – all of it has the makings of a potboiler.

It might not be exactly what every starry-eyed entrepreneur dreams of but one cannot argue that it has been entertaining, with lessons learnt at every stage. And what was the one thing that kept him sane through this baptism by fire?

“An unseen force in my life, some energy, which actually supports you when you really try hard. I felt that so many times, over and over again. I remember in MartJack, salaries would go out on the 5th every month. Many a times, we would be low on reserves as salary day dawned near but somehow finances would magically materialise on the last day and I would be able to pay my team on time. Somewhere, I started believing that someone was holding my back and I was meant to be on this path. So, I guess, I benefited from the support of my family and my team which was visible and from God which was invisible.”

For every entrepreneur who chooses to trod on the risky path of entrepreneurship, we can only hope that this force be with him too!

[Note: This article is part of The Junction Series. Abhay Deshpande will be speaking at “The Junction” in Jaipur in January 2017. Learn more about The Junction here!]