We were doubted and written off but never gave up belief in ourselves: Ixigo's Aloke Bajpai

The company has a 52 percent share in the train OTA market, as of nine months FY24. Its flights and bus market share stands at 5.3 percent and 12.9 percent, respectively. The company is pushing the pedal to accelerate growth in the two segments, especially air.

A day after the bumper listing, Moneycontrol caught up with Bajpai, who shared the story of the resilience of not only the founders but the entire team of Ixigo.

How did the listing day turn out for you? What were your expectations for the company's debut on the bourses?

I did not have any expectations. We did not even turn to look at the share price. The market seems to have given us a lot of love and respect and we are deeply grateful to everyone who participated. We had a ton of messages pouring in from the ecosystem. We are going through overwhelming emotions but we keep reminding ourselves that we have to get back to work.

Also read: Airfares to cool off with capacity additions from second half of FY25: Ixigo's Bajpai

How did you spend your day post the debut on the bourses?

Before we had started the IPO process, I had visited the Siddhivinayak temple. So, it was symbolic for us. After the culmination of the listing process, we had to thank the almighty for guiding us through the process. Yesterday (June 18) we spent time with friends, family, and the (Ixigo) team. We had a lot of ex-Ixigems (Ixigo employees). We had invited a lot of people who were part of the company in its early days — the first five years which was the struggle period. We had our seed investor fly in from Singapore. We had a bunch of our existing as well as new investors. It was a day when we got to meet a lot of people whom we hadn't met for a while. The day ended on a high with a party after an intense IPO process.

Also read: Ixigo’s bumper listing drives its pandemic acquisitions into Rs 100-crore club

It has been an 18-year journey from founding to listing. Did you ever feel in between that why not just sell and retire?

During this journey, there have been times when we were running out of money or the market had crashed, it was 2008 when we were in the midst of a fundraise and the Lehman Brothers crisis happened. Then most recently Covid. In the interim when we ran out of money. There were some approaches and conversations but we could never arrive at something that made sense for everyone. There was a turning point sometime around 2018-19 when Rajnish and I were clear that we are building a company that is built to last and if that is the case then we need to focus on profitable growth and get to a point that we are on our feet and do not have to think of the next round of funding.

In hindsight, it looks like a story of great perseverance and building a business with a lot of resilience. But in reality, it is just those small decisions of saying no, we are not going to shut down at this time but find a way to make it work or not fire half our team but actually the team finds a way to help us by sticking around with lower salaries. And then we reward them with ESOPs (employee stock ownership). These things have happened a couple of times in the journey. We have had our share of rejection. We have been doubted, rejected, misunderstood, written off by several people but we never gave up the belief in ourselves, that is the only thing that has brought us here. The belief comes from the love of our customers. If we just stick to the mantra of building the best customer experience for travellers from Bharat and not just the metros, then people do reward you. This is the hard part and the boring thing one needs to keep doing.

You have called Ixigo a cockroach company. Is the risk of not surviving something that still bothers you? Are you looking at most business decisions from the lens of survival? 

As an entrepreneur you always have to be thinking about how the sands can shift in a direction which you will not anticipate so you always have to be a bit sceptical and worried about the possibility of you being the disrupted one and not the disruptor. And that's the only thing that keeps you on your toes and to bet on new things. Back in 2016-17, we started building our AI (artificial intelligence) chatbot when AI was not a big thing. As of last year, we were powering 90 percent of our customer support interaction with AI because we took an early bet on that.

Sometimes you have to realise the direction in which the market is moving and not ignore the signals and reinvent yourself to pivot to that. In our case, it was for trains because we realised that only four percent of Indians fly then why the obsession of building a flight-centric OTA. This realisation dawned on us back in 2013 that if somebody wants to build the largest OTA in India it has to be built with trains at the core because the average Indian travels by trains. Such bets may not pay off in the short term. When we launched the train app people used to ask us if there is no money to be made in this vertical then why are you wasting your time. But you ignore the noise and carry on.

This template is not new. Google, Meta were built like that. You make something people like and eventually find a way to monetise it. We never built something for monetisation from day one. But that playbook needs a lot of patience and boring iterative work to understand the customer better. It doesn't give you a quick reward and it is all a delayed gratification. That's the hard part because as humans we always want instant gratification. But we keep reminding the team that it is the extra that we do every day that leads to compounding over the long term.

Also read: Ixigo lands in style on the Street, lists at 49% premium

What will Ixigo's debut on bourses mean for your employees? How many employees had enough ESOPs to become crorepatis?

Almost two-thirds of our team has ESOPs. I don't think most Ixigems (Ixigo employees) go back and check every day how much their ESOPs are worth. It is all about the long-term compounding that we are doing. The value generation keeps happening and the value capture can wait.

Your ESOP expenses are pretty low compared to other new-age peers that have gone public and where founders aren't promoters. This means you and Rajnish haven't taken large ESOP payments. Why?

Historically, we never had ESOPs for ourselves. We started with a certain level of ownership. It was tough for us to raise money in the early days and there were investment rounds that came in and over time we got diluted to where we were but essentially neither Rajnish nor I have been obsessed about our ownership and spent too much time thinking about our shares. It is more about the value we have created for our shareholders. Even in the past right from our seed investor to everyone who has come on board from an institutional investment standpoint, I think everyone has made money so far.

We are happy that we have been able to generate returns for our shareholders. Our bigger vision is essentially to build the best customer experience across every category of travel which is three and we have entered the fourth one, hotels, where there is a lot of work to be done. There are many things we don't do today like B2B (business-to-business) bookings, corporate travel and holiday packages which many other OTAs do. So, there is still so much to work on. We are super motivated for the next 17 years.

Any hiring plans as newer verticals open up?

Hotels, we have already launched the product, so there is already a small team that works on hotels and we like to be lean. We are figuring things out on the hotel side. We are very tech-first in our thinking and we don't like throwing people at problems, we would rather throw tech or engineering bandwidth at problems. We have 486 employees as of December 31, 2023, out of which almost half, about 235, work in tech and product.

This year the second batch of tech IPOs happened after the first batch in 2021-22. Were there any learnings from then that you kept in mind while structuring the IPO?

In that particular batch, we were also one of those who had filed, although we had filed towards the end of 2021. We were ready in our minds to go. We had filed in August 2021 and by December we got approval. By 2022, when we wanted to go, that's when the market started to lose its cool, especially when it comes to tech stocks. It was not the best environment so we had hit the pause button so we looked at growing the business and then came back with much better financials after two more years of work.

If I compare then to now, I think there have been a lot of learnings for investors and companies alike. Private companies build for scale, growth and on the other side there is a public market which values more fundamentals, corporate governance, profitability, and predictability. There was a creative tension when these two forces met, which happened for the first time in India in 2021. Both had to adjust to each other. Some people were sceptical about what the tech names are doing and were asking a lot of questions. The companies learnt how to guide more conservatively, how to acknowledge what's going on, and communicate more frequently about what's going on in the company.

Also read: Ixigo banks on Bharat story as smaller towns drive growth in travel industry

In hindsight, the advantage we got this time around was that there is more appreciation for operating leverage starting to play out in tech businesses. It is happening in other listed names. People are seeing profitability coming in, and once it comes in they are seeing there is the ability to expand that because the nature of tech platforms is such that as the platform grows you don't necessarily need to scale your fixed cost in proportion. That something was proven out in the last couple of years. There are companies like Zomato that are great examples of how they have proven the naysayers wrong. They have managed to change the perception just by execution. I think these examples out there also built more confidence in the investor community.

Also, companies have learnt what investors want. People want easy-to-read financial statements and interaction at least once every quarter. Thanks to some of these listed peers, it has brought more understanding about how to think of internet companies. In terms of how public markets understand tech business, India for the first time saw that over the last 3 years. Now, I think there is a deeper understanding of how to think about these businesses and what to expect from their actions because people have not been used to tracking tech companies in the past.