Two young men with an idea start a company in the early dot-com days and go on to survive the shakeout. Four years down the line, they sell their company to a large multinational corporation for $50 million (approximately Rs 230 crore).
Sounds like the stuff Silicon Valley dreams are made of? Except we are talking about a company right in our backyard, a company once touted to be India's answer to the world's largest auction site, eBay.
At a press meet earlier this week after having sold Baazee.com to eBay, Avnish Bajaj (Chairman and Co-CEO, Baazee.com) and Suvir Sujan (Co-CEO, Baazee.com) showed no signs of the customary back-patting that follows a smart sellout.
Dressed in identical Baazee.com T-shirts, Bajaj and Sujan, who could pass off as brothers, were quick to clarify: "It wasn't really a sellout, it's a strategic investment. Besides, we will still be a part of the Baazee team as joint country mangers post-acquisition."
The duo is equally uncomfortable with the "What will you do with your first $50 million?" question. "Please don't say that we are taking home $50 million. It will be used by eBay to buy out our existing shareholders: News Corp, ICICI Ventures, Bid or Buy (a company taken over by Baazee in 2001), Global Bridge Ventures, E-Vision Partners and some angel investors in the US," says Bajaj, chairman and CEO of Baazee.
The idea evolved in December 1999 when Bajaj and Sujan -- who first met at Harvard Business School -- were working with various e-commerce companies in the US during their stints with the Boston Consulting Group and Goldman Sachs, respectively. They also worked with Apple and Nortel Net before giving up their jobs to start their own company.
Started in March 2000 and very obviously inspired by eBay, a Goldman Sachs' client where Bajaj worked for a while before Baazee happened, the company is yet to make any profits. "We were well on our way to break even before the acquisition happened," says Sujan, co-CEO at Baazee.com.
Though it claims to have conducted transactions worth Rs 100 crore (Rs 1 billion), there has been speculation about its turnover. It could be as low as Rs 20 crore (Rs 200 million), says an industry observer.
The speculators are encouraged by the fact that after the takeover, the company's claim of 2.6 million registered member base was refined to 1 million confirmed registered users, on eBay's assessment.
These statistics might cause one to wonder why the $756 million eBay has chosen Baazee to make its foray into the country.
"eBay has never done anything on a small scale. Obviously they see something in the Indian online commerce market that all of us have missed. This buyout is a small part of their Asia strategy," says an industry observer.
The buyout has changed a lot of things at Baazee although Gil Penchina, vice-president (international) of eBay, says: "Nothing will change at Baazee. They have everything right going for them."
The acquisition will scale up Baazee's operations in services, technology and human resources. It will give Baazee members access to a global online bazaar. And it also means stock options for its 100-odd employees.
The buyout has changed a lot for the two Harvard graduates though. Perturbed with reports that they could pocket the entire money in certain sections of the media, the duo has blacked out media until the actual transfer of stocks later this year.
Asked about their whereabouts, a source close to the new online pin-up boys said: "They must be partying hard some place. Look at them, they are home and still running. Hats off to them."
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