'Contribution margins 1, 2, 3 are rubbish. Sach bol do,' says Sanjeev Bikhchandani

Sanjeev Bikhchandani also talked about the current lean funding environment for startups, advising founders to pursue profitability and cut costs even if it is painful.

Taking a dig at new-age companies which use multiple measures of unit economics, Nakuri.com founder Sanjeev Bikhchandani said that founders should clearly communicate about their profitability in the interest of corporate governance.

"Founder should give bad news early and not disguise the unit economics... Contribution margin 1, contribution margin 2, contribution margin 3 is all rubbish. Sach bol do (Say the truth)," he said.

"It is good to be honest. Corporate governance begins and ends with founder's head. You can have all sorts of trappings around it. But a determined crooked founder can go around that we have seen that in private and public markets," he added.

Bikhchandani, an investor in companies like Zomato and Policybazaar, also talked about the current lean funding environment for startups, advising founders to pursue profitability and cut costs even if it is painful. He even suggested that founders take large pay cuts in order to achieve profitability quickly.

Speaking at the Digital India Summit organised by industry body Internet and Mobile Association of India (IAMAI), Bikhchandani said that there was no choice but to break even as quickly as possible when he founded job aggregation site Naukri in the late 90s.

"When you don't have any choice, a lot of things become possible. We put out jobs from newspapers around the country. As the jobs were on the platform, internet traffic followed to the site. And then we succeeded in businesses to pay," he said.

"Shuru mein vision nahin, sales target hota hain. If there's only vision, then you lose money, if sales target then, you break even and make money," he added.