Kunal Bahl, the man driven by discount coupons

Kunal Bahl, 27 years
Age at starting business: 25 years

Company name: SnapDeal

Headquarters: Delhi

Seed capital: Rs 40 lakh

Source of money: Own money and US-based venture capitalists

While I was studying and working in the US between 2002 and 2006, I realised that the retail landscape in India had changed. Buyers were becoming more sophisticated and small retailers had turned professional. So, while consumers still liked a good bargain, they weren’t interested in petty haggling. It struck me that starting a business that provided discount coupons would succeed in India and so I returned to Delhi in November 2007.

I had gone to America for a degree in business from the Wharton School and then I did my post graduation from the Kellogg Management Institute. After completing my studies in 2006, I picked a job as a business development executive with a multinational software firm. Simultaneously, I worked as a consultant for a consumer start-up to launch a detergent. My understanding of market psychology and trends helped me formulate a plan to set up my own venture in India.

The initial months were disappointing. I experimented with many products, such as discount cards and mobile discount coupons. However, nothing struck a chord with either retailers or consumers. Even if an idea received a good response, it wasn’t on a large enough scale to sustain it.

Then, in December 2009, a retailer called me up to say that he had got some customers because of the discount coupons that I had distributed for him. This boosted my confidence and I realised that I just needed the right platform for the concept to take off. This medium was the Internet. So after 15 months of hard work, SnapDeal was born in February 2010.

SnapDeal is an online discount coupon provider for products and services ranging from dining and travel to movies and spa, across 50 cities. Consumers can buy the coupons online by making part payment and redeem the deal at the merchant location by showing the voucher.

The first year was tough and I had to struggle at every turn. Fortunately, I had enough savings and was staying with my family, so expenses were not too much of a problem. One of the most difficult tasks was convincing investors to fund me. I approached 15 venture capitalists and managed to get funds from just one.

While some investors liked my idea, they believed that the Indian market would not embrace it. One investor rejected my proposal within five minutes of my presenting it. His reasoning was that consumers didn’t want coupons as they loved to haggle personally. Instead, he spent an hour trying to convince me to go back to my job.

Persuading retailers was as big a challenge because they were averse to trying anything new. To them I was just another salesperson. I would often sit outside a restaurant for hours to meet the managers. I assured retailers that I would satisfy all their queries and even customise products. The moment one would give me a verbal agreement, I would display its logo on the SnapDeal website. This lent authenticity and gave me something to show to the next retailer I approached.

When I started, my strategy was to approach restaurants and personal-care product firms as these businesses have perishable products with short shelf-lives. I believed they would be more willing to give discounts and help SnapDeal earn a good turnover.

We earned our first revenue of Rs 25,000 from a restaurant chain in the first month itself. However, I soon realised that all retailers were ready to give discounts to attract customers. I started exploring other areas and discovered that there was a high demand for tattoos. This has been my most innovative category and one of our highest selling products.

I started operations from the basement of my house, which made it difficult to hire people. Prospective employees didn’t turn up for interviews when they realised the office was in a residential area. So I ended up hiring a few incompetent people. This was my biggest mistake as my business is driven by my human resource.

In fact, much of my seed capital was spent on paying salaries. Today, I have 350 employees. Coming up with an appropriate name also required a lot of brainstorming, before I settled on SnapDeal.

My initial target was to make 100 sales a day within 6-9 months, but I achieved it in six days. Today, the site is ranked 22nd in terms of the traffic. By the end of 2011, I intend to spread increase the turnover to Rs 100 crore. Two months ago, in the second leg of funding, I raised $12 million from two private equity players. This time, I had my pick from five investors, who were eager to finance me.