12 Mn monthly active users, over 40 Mn app downloads, $25 Mn in funding and more than 300,000 monthly transactions. Looking at these numbers, it is easy to forget the struggles and adversities that ixigo’s founding team went through when starting up. In its decade-long journey, the travel search marketplace has weathered many storms, from the financial catastrophe of 2008 to having a Series A funding offer withdrawn just days before signing the documents. For ixigo co-founder and CEO Aloke Bajpai, however, there are lessons to be learnt from all of these setbacks.
Founded in 2006 by Aloke Bajpai and Rajnish Kumar, ixigo is a travel search platform that claims to connect over 80 Mn travellers with content and deals from over 25,000 online as well as offline partners. It aggregates and compares real-time travel information, prices and availability of flights, trains, buses, cabs, hotels, packages and destinations. In an overcrowded space where digital penetration is still very low, ixigo has embraced new, innovative technologies like artificial intelligence (AI) and machine learning (ML) to improve its products and the user experience.
A tenacious entrepreneur, Aloke is known among his team for his business acumen, consumer-centric thinking, intuition, creativity and perseverance. Prior to launching ixigo, he worked in various technology roles at Amadeus SAS, France, where he was part of the team that built web-based cruise-line booking engine for agencies. Since then, his love for Internet products and Croissants has never abated.
Despite ixigo’s phenomenal growth in the last few years, Aloke has remained remarkably grounded, valuing transparency and hard work over quick fixes. An IIT Kanpur Electrical Engineering alumnus and an MBA graduate from INSEAD, he possesses the pertinacity and patience that even the best entrepreneurs and startup founders lack. He is a mentor and advisor for several startups and accelerators and has also made investments in companies like SourceEasy and ZAPR.
Looking at his vast contribution to the Indian startup ecosystem and the success of ixigo, we decided to host Aloke Bajpai for the Inc42 Facebook Live AMA. During his AMA earlier today, Aloke spoke about how ixigo is growth hacking its way to more than $7.7 Mn revenue (INR 50 Cr). Here are the key takeaways from the interaction:
Navigating Through Setbacks, Building The Right Team And More
Question: If you reflect on ixigo’s decade-long journey, what have been the major highlights that stand out?
Aloke Bajpai: It’s actually going to be almost 11 years in a few months. When I look back, there were three key events that really shaped where we are today. The first was the fact that we were a company that started purely because the founders believed in a particular vision and wanted to build a product that can help Indian travellers search and compare hotel information at one place. It was purely that passion that got us started.
During those days, we did not even think about funding. Our focus was on developing a product that the world actually needs. There are a couple of companies that have built something on this model and even though it was an unproven model back in the days, we believed that it was a more consumer-friendly way of searching for travel information. So once we had the product, we went and talked to clients. We heard ‘no’ a lot; most didn’t get what we were doing.
The first lesson we learnt was that, as an entrepreneur, we will hear a lot of ‘no’. That should not mean that you are on the wrong path. Rather, it means that you are on a difficult path and if you are able to build that path for yourself, you will have created a new market. One thing we did very successfully was that we created a blue ocean in this whole red ocean of online travel aggregators (OTAs). There were four well-funded OTAs at the time, and we were the fifth company looking at the space. It is important to believe in your vision and not get dissuaded by all the ‘nos’ coming your way.
The second lesson was with regard to fundraising. Our experience was very difficult. There were a few funds and most were not focussing on tech products. Investors would just fund copycat models from the west. So, it was a very tough sell to investors and we ended up raising our Seed round from Singapore. This whole process made us realise that we have to learn to survive without money and we actually did that for several years. We actually raised our Series A more than four and a half years after we started the company.
The third thing was when we learnt that one doesn’t need a lot of dollars to build a product or tech company. People believe that you can’t build a large enough business without spending hundreds of millions of dollars on marketing, especially if you are building a B2C brand. Here, we have 12 Mn monthly active users. In the cumulative decade, we have not spent more than $4 Mn-$5 Mn on marketing. That’s because we have consistently focussed on the product-user experience, making sure we deliver what we promise. That has to be the DNA of any good product company.
Question: What is crucial when setting up the initial team?
Aloke Bajpai: Most of the time we want to have friends as co-founders because we are very comfortable with them and we trust them. But, I think one has to look at it a little more objectively and see if the co-founders have some complementarity in their skill set and attitude. Somewhere, in most successful startup teams, you will see that one founder is a lot more business and marketing savvy, while the other person is more of a tech/product person. If you can find a team that really complements each other and at the same time gets along well, that’s the perfect mix!
Question: There have been setbacks in ixigo’s journey. In the past, for instance, you have seen a Series A offer being withdrawn by the company you were in talks with. How did ixigo manage to come back stronger after that?
Aloke Bajpai: Let me tell you what had actually happened. We were days away from signing the documents with a particular VC and were probably a couple of weeks away from having money in the bank. At the time, the whole world was collapsing. Lehman Brothers had just declared bankruptcy and the whole financial crisis started to unfold. A big mistake that founders sometimes make is not being transparent with the team.
So the moment we realised it was not happening, we did a small hurdle with our team, which at the time comprised of 25 people. We called everyone and told them what had transpired. We also told them that we had money for only the next two to three months. There was this junior engineer stood up and said, “Look, we can all work without a salary till the time the company gets back on track.”
Although I told them that it was not going happen, we did manage to work out a strategy that would help us survive for one year. Since then, the DNA that we have built for ixigo is literally based on transparency. At times when we face a difficult situation, we also take counsel of our employees. As a reward for their hard work, we actually gave a lot of these employees ESOPs.
Question: Acquisition continues to be one of ixigo’s main strategies to drive growth. In the last few years, it has taken over companies like Reach, The Indian Backpacker and Rutogo. How have these acquisitions helped bolster ixigo’s presence in the space?
Aloke Bajpai: Most of these acquisitions were actually acqui-hires, where we wanted the teams of these company to come and work with us and help us build something bigger. In a couple of cases, it worked out very well for us. These people are still here. They are owning and managing very important businesses for us. We are very hopeful about the outcomes of these partnerships. We will continue with this strategy in the future as well. We will like a team that is doing work relevant to us, we might acqui-hire them.
Question: MakeMyTrip has a small stake in ixigo. Given that MakeMyTrip recently merged with Ibibo, could we expect ixigo to go down the same road?
Aloke Bajpai: MakeMyTrip has a small minority stake in our business. They are a strategic investor. From the standpoint of how we operate, we are operating as a totally independent business. We have an independent board, and our own vision and direction of where we want to take the company. I can’t comment on any speculation on what is likely to happen in the future. All I can say is that at ixigo, our vision for where we want to be in the travel industry is a lot broader.
We think of ourselves as a more consumer-centric player that lies right at the beginning of where people start thinking of travel. That’s where we want to start becoming more relevant. OTAs typically want to be more at the transactional end of the funnel. That’s a big difference between where we are and where they are.
Ixigo Aiming To Exceed $7.7 Mn Revenue By 2017
Question: You are aiming to close this year with a $7.7 Mn (INR 50 Cr) revenue, which is almost double of what you made last year. Are you on track to hit this goal? Secondly, what marketing activities would you say have been the biggest contributors to ixigo’s growth?
Aloke Bajpai: By the end of 2017, we will not just hit this goal, but will probably exceed it. We have seen some really crazy growth in terms of the number of transactions. If we continue on that path, we are definitely going to reach the target we have set for ourselves. Coming to our marketing strategy, we have been a bit conservative in terms of our thinking on marketing.
Unlike many companies out there that are loud on TV and ad spendings, we have chosen to go down the route of content marketing. We rely a lot on organic video traffic. We spend a lot of time thinking about search engine optimisation (SEO) and app store optimisation (ASO). We also have a lot of focus on building partnerships with third-party entities that would help us distribute more effectively.
That has enabled us to acquire customers in a cost-efficient manner and will continue investing a lot on that. Perhaps, next year, we will up our spendings even more, given that we will have more money to spend. Currently paid marketing contributes less than 25% of our user base. Over 75% of our users actually come to us organically or through referrals.
Question: In March this year, ixigo raised $15 Mn in Series B funding. How will you be utilising this and all future capital to drive the company’s growth over the next two to five years?
Aloke Bajpai: This was just fuel to get to our destination. Funding doesn’t really change anything in terms of our end goal. Our vision is very clear. We want to give people a more personalised travel search, planning and booking experience. We started as a meta-search engine, where we aggregated a lot of data. Once we had all the data, we wanted to make it more intelligent. So, we added one layer of intelligence in the form of PNR prediction for trains, fare prediction for flights and so on. Our goal was to start using data to make meaning predictions and personalisations.
The next level is when the technology is so intelligent that it can predict what the customer wants. Once you know enough about the person from, say, their search history, you can use technology to figure out what he or she wants. Our intent now is to make the whole experience more and more customised and to become that personal travel assistant that sits on everybody’s phone and provides train/bus/cab/flight information.
On Utilising AI And ML To Develop The Next Generation Of Products
Question: ixigo has been using artificial intelligence and other technologies to improve the user experience. What are some of the use cases where ixigo is using these technologies?
Aloke Bajpai: We are using them behind the scenes for a lot of things. We are constantly working on improving hotel curation and ranking based on data science as well as on the user’s past searches, click-throughs or bookings. Through this, we can offer a much more personalised, curated list of hotels/flights/trains that will help the customer save a lot of time.
We are applying data science to narrow down results. We also thinking of how voice can be used. One of the areas that we have focussed a lot in the last six months is about providing end-to-end voice-enabled experience for flight, hotel, train searches, bookings and even web check-ins. We are trying to build a bot that could eventually have voice chat with customers. To that end, we have started using Siri, Alexa and other similar technologies. The next level will be where all apps will need to have a voice-based interface. We want to be the leaders in travel for that.
Question: Is ixigo doing anything significant with bots, artificial intelligence and machine learning?
Aloke Bajpai: More than a year back, we had launched ixibaba, which is a chatbot that works on textual queries and gives you answers related to travel searches. What we are working on now is more interesting. We are working on a voice-based travel assistant and we are calling it Tara. We actually launched it in the US a couple of weeks back and we won an award for it. We are going to take the product live within the next few months. With it, you can literally do all your travel planning, searching and booking on voice. We are also working on integrating automated web check-in, automated discovery of hotels using voice.
Growing With The Market, Instead Of Growing The Market
Question: In India, hotels remain a largely unorganised space, where digital penetration is still very poor. How is ixigo coping with the challenges that the sector presents?
Aloke Bajpai: At ixigo, our strategy is that we try to grow with the market because growing the market takes a lot more dollars and effort. We want to ride with other companies that are helping grow the market. But we want to grow with the market and may be faster than the market. Our goal is to build a better hotel discovery product; build a product that helps customers find better hotel prices and we will continue growing leaps and bounds there.
Question: What is your take on online travel aggregators (OTAs) vis-à-vis OYO and Treebo?
Aloke Bajpai: There is a space for both the models. OTA is a much broader, horizontal mode. If you look at OYO and Treebo, they are very focussed on the hospitality sector, especially budget hotel aggregation (at least that’s how they started out). Given that the market depth in India is so big and only 15%-16% of hotel bookings happen online, a large percentage of it still takes place through calls and walk-ins. It also means that there is a huge upside that can be built along the hotel aggregation vertical. At the same time, the OTA market continues to grow in double-digit percentages year-on-year. However, both have their own spaces.
According to a Google India-BCG report, the country’s travel market (both offline and online) is expected to become a $48 Bn industry within the next three years. As per an IBEF report, online travel will likely account for 40% to 50% of total transactions by 2020. Despite this enormous potential, the Indian online hotel booking sector has a penetration of only around 19%, according to a report by Deutsche Bank AG. Instead of growing the market, however, ixigo is more keen on growing with the market. True to its vision, the company has embraced emerging technologies like AI and ML to offer a more personalised user experience. While competitors are opting for mergers and consolidation, ixigo founder and CEO Aloke Bajpai remain undeterred in his aim to build efficient travel search products that serve the customers in the best possible way. Having survived a series of adversities and misfortunes, the online travel search marketplace is now shooting for new heights of success.