Valuation Is A Combination Of Real Business Value And The Market Sentiment – Rohit Bansal, Co-Founder, Snapdeal

“I want to see all the stalls outside, but without my name tag, so that people don’t start pitching to me!” said Rohit Bansal, the rockstar entrepreneur, during the first session of the Surge Conference –“The Billion Dollar Question”. In a conversation with Sourav Majumdar of Forbes, Rohit spoke at SURGEConf about Snapdeal’s efforts to build an ecommerce ecosystem around Snapdeal, its mission, and how it is driving technology to make its products and user experience better for consumers.

Building An Ecosystem Around Snapdeal

When they think of an ecommerce company, they think it should be like 10 other ecommerce companies that existed in the world. Or, if it is a payments company, then it should be like 10 other payment companies in the world. But the real world does not work like this, especially when you think of India. One thing that’s happening in India and is different from other markets in the world, where ecommerce took off, is that smartphone is the primary device. When you access internet on laptop, you spend 1-2 hours continuously doing something very specific, whereas on the smartphone you are always checking internet every 10 minutes. So, PC internet is the equivalent of having a really big lunch at one time, while mobile internet is like having 2 biscuits every 10 minutes. It’s like snacking.

But, as a result, consumer behaviour is changing drastically. When people are accessing internet many more times a day, they are also doing many more things in a day. When people are accessing internet so frequently, successful commerce companies will get built, by participating in more and more of these internet interactions. People might not be buying something everyday but they are doing something on the Internet, like booking a cab, paying for food, or booking a flight ticket. So, this gave us an idea that building successful companies requires building an ecosystem which participates in their daily life and makes life easier for them. That’s why we are focusing on building an entire ecosystem which includes our B2C business Snapdeal, our payments business Freecharge, our C2C business Shopo, and we will keep expanding.

On Reinventing Again And Again!

The first time we changed our business model, the word pivoting was not popular at that time in India. As we changed two three times, it had become popular by then. There are two-three things we have learnt in our evolution journey. One, that as a company or people, we are relentlessly focused on making it the most successful company; and the rules of the game will keep changing. When we started as a coupon company, there was hardly any internet in India. So, we started a coupon booklet. Then, when the Internet started picking up in India, we thought we will able to distribute our coupons far better, to users, if we go online. When the world started to grow further, we saw the opportunity of building a product marketplace. Then we thought how we could build a technology platform connecting users and suppliers. And hence the evolution we are going through.

The first time it was hard to change, as we, ourselves, thought that why are we changing what we started. What helped us was that we were relentlessly focused on building a successful business, which creates a large impact. Everything else was secondary. Second thing that helped us was extreme objectivity in making decisions. The world is changing, and if we are not taking the right decision, we will be doing our team, our consumers, our investors a huge disfavour.

Acquisitions And The Balancing Act

One of the very interesting things for us is that since day one (in 2010), when we ourselves were very tiny, we started acquiring companies. None of the founders of those 12-14 companies have left us. We were also thinking why that is the case. At some level, it has deep roots in our culture of entrepreneurship and high ownership. One such founder pointed out to us that even though he is working in Snapdeal, he feels the same as when he was running a 25-30 members smaller startup. And similarly, other founders feel at home despite the fact that they were running far smaller companies. So, I think why this works for us is because we have a very deep culture of entrepreneurship and decision making. As long as we can keep this culture alive, I think we are doing the right thing.

Secondly, about technology, our viewpoint is very simple – the whole purpose of technology is to make user experience better. There’s a lot of talk about big data but, to us, the most important thing we need to do is to humanise technology. Unless technology makes experience far more personal, it doesn’t serve the purpose. For instance, we have found some very interesting insights through big data. When people buy helmets, they are most likely to buy Bluetooth devices next. These insights are hard to guess, but when we looked at our data that’s what we realised. So we are using this information to improve user experience and make life easier for them by suggesting them what they want to buy next.

On Valuations And The Startup Bubble

I get asked about the bubble in the startup ecosystem frequently. What I can say is that we have been here since 2008 and we have seen some cycles in the market. The market crashed in 2008; similarly 2012 was also a very bad year for startup ecosystem. Our belief is that what you need to do as a business and what is your valuation are two different things.  The first one doesn’t changes fundamentally for a long time. What you need to do as a business has to be the right thing for your users, your team, and your suppliers. Valuation is an outcome of all the right things you are doing. If your valuation starts influencing what you are doing, then I don’t think you are running the business the right way. For us $7 Bn is an outcome, a number of what we are doing.  What we are really more excited about is what we are building.

Also valuation is a combination of two things – one of the real business value in your business, and two, the market sentiment, which can be here or there, depending upon good and bad times. We are entrepreneurs and we keep reminding ourselves that we are here for a very long ultra marathon. And we just need to keep our heads down and keep working on the right things. As long as we are doing the right things, we are ok.

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