The rise and fall of India’s oldest foodtech startup – was Burrp served a cold lunch?

Once touted as India’s answer to Yelp, Burrp’s sale for a paltry Rs 6.7 lakh is the story of how an opportunity was frittered away. Can its acquisition by BookMyShow give it yet another lease of life?

Sometimes even a first-mover advantage doesn’t really ensure a startup’s survival, let alone its growth. Burrp is the most recent of such examples. One of the oldest foodtech companies in India, Burrp had set out, in, 2006 to be the Indian equivalent of Yelp.

Founders Deap Ubhi and Anand Jain had then just returned from the US after working for the likes of Motorola and AT&T. They had seen the dotcom bust in the US a few years previously and found that India was slowly opening itself up to businesses led by tech innovation – what was commonly known as “startups” abroad.

But in a scenario where even “startup” wasn’t a commonly used word, the term “foodtech” only drew blank stares. They went ahead with their idea anyway and created Burrp—the very first website in India that gave users the option of looking for the best user-rated restaurants, cafés, and bars in a neighbourhood they wanted.

Consider the internet landscape in India in 2006. The internet was primarily accessed either from your office or from a neighbourhood cybercafé for upwards of Rs 20 an hour, depending on how fancy it was. Flipkart hadn’t been conceived of, Orkut was the only social media around, Gmail was just catching on, and people simply did not go online for information they got by word of mouth.

At some level, Burrp was a moonshot.

Trying to tweet on Orkut

One early employee of Burrp told YourStory on condition of anonymity: “The product as such wasn’t too complicated. (The premise was that) people who come online have a set of queries and Burrp would answer a few of them. When Burrp started, the market was too small and niche. There were no smartphones.”

Deap and Anand forged ahead nonetheless, first operating out of a restaurant tucked away in suburban Mumbai. “People didn’t know what a startup meant. When people came in for interviews, they thought we were a back office of a company operating in the West,” Anand told YourStory in 2014. “We are the office!” the duo had to explain to befuddled job applicants.

An early acquisition

In December that same year, Burrp raised seed funding of $150,000 and followed it up with $2 million in Series A funding, led by Network18 the next year. Burrp made its money from ads on its site. Users accessed everything in it for free. It was a win-win and the site was gaining popularity through word of mouth and trusted reviews and ratings. Just when things were going well, the competition began to heat up. In mid-2008 Zomato arrived on the scene. The likes of FoodPanda and JustEat were yet to enter India.

Burrp was doing well – it was present in eight cities and the media buzz was that it was trying to raise $6 million in Series B funding. By this time, Zomato had started to become a real threat. An exit option appeared in the form of existing investor Network18. On its part, the media group was looking at modernising the yellow pages via subsidiary Infomedia18.

Another early employee at Burrp recalls how Network 18 wanted to buy the startup to compete with JustDial, which had put all the information contained in the yellow pages just a phone call away. “Network18 was looking at Burrp as a digitised version of JustDial for restaurants. The idea was to build a business that rivalled JustDial, which was big at that point in time,” adds the employee. AskLaila was another competitor in that space. All the individuals YourStory spoke to for this article, requested anonymity.

In 2009, Burrp had a strong market share in Mumbai and Bengaluru. Mumbai, because it was where it started, and Bengaluru because it was the IT capital of the country, and a larger number of people were comfortable with the idea of going online to get the information they wanted. Network18 acquired the startup via its subsidiary Infomedia18 for Rs 4.5 crore.

The acquisition made news because here was a young company that had made bold bets in a nascent space, grown and proved valuable enough to be acquired. It was one of the first startup acquisitions in India and a pat on the back for the founders, who stayed on for a year but moved out after that (which is what often happens when a company is acquired).

Indeed, many of the founders and core team of Burrp went on to become the Indian equivalent of the Paypal Mafia, creating a clutch of well-known internet companies like TableHero, (Deap founded TableHero, and was even with FreeCharge for a while), WebEngage, CleverTap, and Crowdfire.

[Also read: ‘The Burrp effect’ ]

Not understanding the user

Burrp had everything going for it—the company could well have gone beyond just the restaurant space and become the online equivalent of the yellow pages. However, the acquisition proved to be the beginning of its decline. An early executive from Network 18 who has knowledge of what transpired after the acquisition says,

“After the acquisition (and lock-in period), the entrepreneurs had no incentive to stay back. And Network18 didn’t understand how to manage and deal with the company.”

Several media reports have talked about the management level changes at Burrp for several years after its acquisition. Emails sent to Network18, Reliance Industries (which owns Network18), Deap Ubhi, and Network18’s then-owner Raghav Bahl remained unanswered at the time of publication. (Should they provide a response, the story will be updated to reflect that.)

While Burrp had a loyal customer base, most of its users were early adopters of the internet, so the number of users that the company had at the time wasn't enough to create a sustainable business model. There were simply not enough people coming to Burrp and with a falling reach, advertising revenue began to fall.

Most believe that Burrp and Zomato had comparable products, and for the technology that was available in 2006, Burrp was leagues ahead.

However, in 2010, Zomato raised $1 million in funding from InfoEdge. At the time, Zomato Founder Deepinder Goyal wrote on the company blog that they were serving over two million customers and had launched their operations in Pune and Bengaluru, with over 8,000 restaurants on their website.

Burrp, on the other hand, was present in more cities, but that wasn’t enough to stay ahead. “One of the biggest mistakes we made early on was to choose the wrong goal of profitability. We focussed our efforts on making the business profitable. We built a sales team, while Zomato focussed on breaking (into) the market and building a brand for itself,” says another early Burrp employee.

The harsh reality of the consumer internet businesses is that either you build a business model really quickly or raise truckloads of money to help you sustain. Do neither and businesses die.

The management jugalbandi

Many believe that the approach of the founders of Burrp and the heads of business at Network18 did not match. There wasn’t much left for the founders to do within Burrp as Network18–like any large company–had its own set of processes that took time to implement and were in stark contrast to the agility that is typically present in a startup. Indeed, Burrp Co-founder Anand Jain told YourStory in early 2014: “Things could have been done in a much better way. Burrp! was in a brilliant space and had a lot of choices in front of it but things went downhill around the time of acquisition and even more so post it.”

Network18 had several businesses to run, and Burrp was one among many, and a rather small one, at that. Of the various people that took over Burrp at various points in time, none stayed long enough to make a difference. And with every new head came a different philosophy and approach, which did not help.

“There wasn’t (enough) money pumped into the company, and the group didn’t even use their own properties to promote Burrp,” says the employee who had stayed on. He adds that with time, Network18 was unable to pump in the funds to help Burrp compete with Zomato. This was likely because the parent company itself was heavily leveraged and bleeding, all the while focused on its core entertainment business. While Network18 did manage to considerably narrow its losses in 2010-11 following a fair bit of restructuring, the recovery was short-lived and the very next year, the company posted its highest ever pre-tax losses of close to Rs 500 crore.

“The people who started Burrp weren’t around. Everyone seemed to have given up on Burrp early on. Every business has its ups and downs and in the down phases, it is important to have someone strong who believes in the product and business and can pull it up,”

adds a former executive. Another talks about how monetisation in the space isn’t easy. He believes that if those who were running Burrp had put more skin in the game, the story might have been different.

Network18, while fighting to keep its head above water, was unable to do what was needed at that point in time to capture a larger base in a nascent consumer internet market.

Looking for sweaters in summer

“Internet in India was in its early stages and we were focussed on the wrong battle,” says an ex-Burrp employee. To put that in perspective, in 2009, Burrp was barely valued close to $1 million. For any internet business, users are the key, and Burrp didn’t seem to get into the game of user acquisition like how Zomato did. In the meantime, rival Zomato was racing ahead. Explains one food entrepreneur,

“Zomato had a strong understanding of the F&B businesses. The first thing in their business that Burrp got wrong was charging the customers (restaurants) for listings, while Zomato gave it for free.”

Zomato had commoditised listings, prompting an exodus of restaurants listed on Burrp. By this time, since Burrp had a fair amount of management churn, the focus was diffused. Zomato focussed on market acquisition, and with time, even improved its tech.

The business nevertheless kept running. Even after the rather spectacular takeover of Network18 by Reliance Industries in 2014, Burrp had not been entirely ignored. Indeed, in early 2016, when YourStory caught up with Burrp management, it had a team of 200 people, of which 150 took care of content management. It had content operations in 14 cities and sales and marketing teams in six of these. The company intended to focus more on building a robust sales and marketing team that year.

Reliance had brought in Abhishek Chhajlani, a former entrepreneur whose startup had been acquired by Network18 in 2015. Joining him was Pradeep Prabhu, who had earlier headed business finance for Motion Pictures, Consumer Products, Regional and Digital Divisions at Viacom18.

October 2015 saw Burrp relaunch, boasting information on three million dishes and 65,000 restaurants. On Android, Burrp had over 500,000 to 1,000,000 installs and has a rating of over 3.9. Abhishek and Pradeep said they had a base of 500 merchants advertising on the platform and were looking at Rs 150 crore in revenue by 2019.

The story, however, turned out very differently. Far from the lofty targets for three years hence, Burrp could only muster up Rs 56.67 lakh in revenue in FY 2016-17. When the new fiscal year began, the board of Network18 decided it was time to put Burrp on the block. Its net worth stood at a negative Rs 28.29 crore.

Last Monday, BookMyShow announced that it had acquired Burrp in an all-cash deal for the paltry sum of Rs 6.7 lakh. Network18’s words of farewell were much like what someone might say when a relationship ends: Revenue was insignificant (0.7 percent of Network18’s turnover) and the investment and focus required was not something it was willing to take on.

The latest deal is a related party transaction, in that both BookMyShow and Network18 are companies owned by Reliance Industries Limited—Network18 sold Burrp to Foodfesta Wellcare, an arm of Big Tree Entertainment, which in turn owns and operates BookMyShow.

BookMyShow now intends to use Burrp as a platform that helps their movie and event goers. Mansi Vora, Head, Mergers and Acquisitions, BookMyShow, said in a press statement, “F&B is an integral part of the entertainment experience—be it movies or events. Burrp is India’s oldest food tech business and we are excited to benefit from their experience, technology, and partnerships to curate food-led experiences for our users.”

Many are pessimistic if the deal can actually salvage Burrp. The synergies do exist. For BookMyShow, it is a great bargain, as the company gets human resources, the product, and technology at a throw-away price. For now, Burrp will run as an independent entity but will be available to all BookMyShow users to look for restaurants, cafes and bars near multiplexes, cinemas, theatres and other event venues that they might be around.

Burrp had all the elements and makings of a great product—a great team, strong tech and a market waiting to be grabbed. It now remains to be seen whether BookMyShow’s backing can help Burrp stage a second and more successful comeback.