SUMMARY
Traveltech startup EaseMyTrip initially started as a B2B SaaS solution provider for offline travel agents before pivoting to a B2C business.
Several profitable years, and mere months after an uber successful listing, the Delhi NCR-based startup is now a unicorn.
Prashant Pitti, the cofounder of EaseMyTrip, explains how startups can be bootstrapped and still do what is best for customers without hurting profitability.
Startup founders, especially those new to the business and building early-stage companies, often encounter too many doubts and challenges. Should the startup grow fast or focus on profit? Should it be bootstrapped, or should the founders dilute equity to raise funds? Should the company stick to its original business model or pivot with the evolving demand?
Prashant Pitti, the cofounder of Delhi NCR-based travel tech startup EaseMyTrip, was no different.
Set up in 2008, EaseMyTrip catered to the offline travel market for the first three years, helping travel agents book domestic air tickets via its website. The bootstrapped startup was growing at a fast clip as it was probably the only company in the B2B2C travel space offering this service.
But Pitti knew that the good run might not last long. Offline travel agents/agencies could become obsolete soon, with people and services heading online.
Despite the travel agents threatening to pull their business which led to a 70-80% drop in business, Pitti decided to pivot and enter the B2C travel space.
Asked whether the switch was necessary, the cofounder emphasised how his pursuit of growth made it mandatory to take a different direction. “It’s because our job as [early stage] founders is to optimise [the business] for at least a decade and not just for a few days,” he said.
Watch Vaibhav Vardhan, cofounder and CEO of Inc42, in conversation with EaseMyTrip’s cofounder Prashant Pitti on the latter’s core learnings as the founder of a unicorn, the best way to navigate the startup funding winter, and the best practices for building a good team and a great brand story.
But after turning a profit for years and a successful listing in 2021 (the INR 512 Cr IPO was oversubscribed nearly 160 times), the bootstrapped startup entered the much-coveted unicorn club when its market cap crossed $1 Bn on September 17, 2021.
Throughout this challenging but exciting journey, Pitti and his fellow-founders have followed a simple yet effective framework to balance innovation with success – do what is best for customers but do it profitably.
When Covid-19 reared its ugly head early in 2020, the travel and hospitality industry was among the worst hit due to a global shutdown to contain the pandemic. India and other countries closed their borders and went into a complete lockdown, confining citizens to their homes for the foreseeable future.
For an online travel aggregator (OTA) like EaseMyTrip, it meant scores of customers cancelling their bookings and asking for refunds, as no one knew how long the lockdowns (or the pandemic in general) would last. For context, even after three years or so, the pandemic still rages in many parts of the globe.
Keeping consumers’ best interests in mind, Pitti took a bold call in 2020.
“There is no point having INR 200 Cr sitting in your bank account (profits accumulated over the years). We thought the best way to use the money was to give people their refunds, even though the money paid by our customers had already been passed on to the airlines and hotels,” he said.
His action ruffled many feathers and caused a social media uproar as users tagged EaseMyTrip’s competitors and asked why they hadn’t got their money back.
This bold move also led to an unexpected outcome. EaseMyTrip overtook Yatra to become the second-largest OTA when lockdowns were lifted, said Pitti.
Post its IPO, EaseMyTrip has set its sights on bigger challenges and focussed on overseas travel.
Globally, the online travel market is estimated to grow at a CAGR of 10.6%, from $800 Bn in 2021 to $1,400 Bn+ by 2027, a Research and Markets report says. Eyeing a slice of this pie, the travel tech company opened an office in Dubai in March, 2022 and another in London (2019) in the UK, among other initiatives.
Most other OTAs charge a convenience fee as part of their business model but EaseMyTrip doesn’t and yet proves to be profitable.
“Our model [USP] is not that we don’t charge convenience fees. Our model is that we can afford not to charge convenience fees as our cost structures are so well-aligned,” said Pitti. “So, why can’t we do whatever we are doing here in India and serve the world?”
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