Last week, entertainment ticketing platform BookMyShow was looking to raise $100MM, vaulting it to a unicorn valued at $1.1Bn.
Winning The Toss
On a backpacking trip in the south of Africa, 3 young friends Ashish Hemrajani, Parikshit Dar and Rajesh Balpande were taking time off from their respective jobs.
The three observed a few interesting trends in South Africa, including long queues for tickets and the selling of rugby tickets on the radio. Ashish Hemrajani, all of 23, was in his first job with communications firm J Walter Thompson.
Under the effect of a cocktail of alcohol and nicotine, he sent an expensive international text message to his boss that he was quitting.
Realising that he had already pulled the trigger the next day, he had an inkling of what he wanted to do through his travails in Africa. Mr. Hemrajani convinced his two friends to come on board to sow the seeds of a young startup that would do something in the ticketing business.
BigTree entertainment was born.
The 1999 dot-com boom allowed a young Indian startup to raise $500K to sell tickets online or on call when neither of these ideas was considered remotely plausible. With dialup connections, no online payments, and theatres having no software backend – it was a Herculean task.
Yet, BigTree has 20+ competitors with the same business model. Given the constraints, BigTree would book tickets in bulk and then deliver tickets to customers in person. The company hired a fleet of delivery boys (a full 2 decades before Swiggy) and cash on delivery (a full decade before Flipkart).
While it seems unthinkable today, holding the inventory of seats in theatres while selling tickets online would attract another round of funding and 150 employees.
The founders had won the toss, by taking a big gamble on their jobs.
The business continued to scale well, given the amount of funding it had raised.
The equity financing crisis of 2000 had begun to unravel, and it would soon hit Indian shores. From being a badge of honour, being a .com company would become a liability.
The small, but fast-scoring BigTree, would be hit in the chin by the bouncer after choosing to bat on what seemed to be an easy pitch.
As fast as they grew, the withdrawal of investor interest in funding a .com company resulted in a collapse of the team. From 150 members, the company downscaled to the 3 founders and 3 more team members.
The withdrawal of funding also made the loss-making business model of selling tickets on call unviable. The losses involved in acquiring customers and delivering tickets could not be sustained as a business with no investors.
The .com bouncer knocked out the ticketing business, and it would instead have to look at more profitable pastures. In 2001, the company had incidentally tied up with a ticketing software company in New Zealand and faced with an endgame, it decided to play on as a ticketing software company.
Simultaneously, a wave of multiplexes started to blossom across India in 2003.
Seeing the wave of multiplexes setting up in 2003, BigTree decided to sell ticketing software to stay afloat.
SaaS may be hot today, but in 2003 it was just plain software. The company hustled to get in touch with multiplex providers to sell ticketing software to manage customers better. At the time, seat inventory would be manually counted, sold on the counter, and result in big queues.
The manual entry and ticketing system was laborious and resulted in troublesome customer experience (long queues), painful vending experience (seat allocation) and laborious collections (cash counting).
For all of us who grew up in the early 2000s, standing over a counter peering at an upward facing computer monitor showing seats would have something to do with BigTree.
It turned out that this software solution was actually transformative for multiplexes, as it was adopted slowly. These days of hustle and grind after the heydays of well-funded scaling would ingrain a disciplined culture in BigTree, and contribute to its DNA of humility.
The company would build out, profitably, and find itself in good shape in 2007. After playing defensively for 4 years, the company would play an audacious reverse sweep to get back into its original business, with an investor in tow.
BookMyShow, the online ticketing platform, was born in 2007.
Pacing the Innings
With ~$2.5MM in the bank and a valuation of $5MM, BookMyShow could take baby steps after being acquired by Network18.
Burnished by the mistakes it made a decade ago, the company would be cautious in its approach to building the ticketing business. With a 15 INR fee in place for booking tickets online, and a semblance of online payment infrastructure, the company began to slowly scale revenue.
Bear in mind that BookMyShow was a majority-owned subsidiary of Network18, which would turn out to be an investment a top tier VC could only dream of.
In 2008, the company would scale to revenue of INR 7Cr (~$1.4MM), while losing half as much. In 2009, it would improve by 50% to 10 Cr (~$2MM), while it would make a small (and prescient) move into the IPL “circus“. Why this move would be definitive for the company would be clear as it would evolve.
By 2010, the company was the market leader in online ticketing category.
The company would sell 650K tickets every month, with INR 10 Cr ($2MM) of tickets sold each month. This performance would translate into INR 12 Cr ($2.4MM) of revenue, as BookMyShow took a fee on each transaction. Unlike its former ticketing self, the company improved profitability.
From a profit % of -60% in 2008, it progressed to a -2.5% profit in 2011, at a revenue of INR 16 Cr ($3MM), piquing the interest of India’s earliest internet investors.
Network18 would sell 20% of its stake for an incredible 100Cr, valuing its 15Cr stake at a 20x multiple in 5 years.
With 2MM tickets being sold each month, and 7 MM visitors, BookMyShow was ready to use its feet to dance.
Dancing Down the Ground
The hottest company to watch out for in 2012 was on fire.
After raising $18MM, and setting up its mobile application, the company began to scale rapidly. It added more sports such as Formula One, Badminton and Tennis, as the company began to quietly build a capability that would turn out to be game-changing.
The other game-changing business model borne out of having no option would turn out to bear fruit. As BookMyShow had spent a decade cultivating relationships with theatres, it had embedded software to manage their seat inventory and customer relationship.
The efforts would bear fruition in a deal to list movie chain giant PVR’s tickets for 5 years, which BMS saw bringing in 1000 Cr of revenue in 5 years. Additionally, BMS was profitable and clearly scaling a juggernaut.
3.6Bn movie tickets were sold in India, and BMS was only selling 0.02Bn.
With a 50-60 INR average price in 2013, the ticketing business was ~$4Bn, and BMS only accounted for less than 1% of these overall sales.
The company was now hitting it out of the park, with 100% growth to INR 52Cr ($10MM) in 2013 and INR 84 Cr ($14MM) in 2014. BMS was now in 200 cities with 2400 screens, with 7MM registered users on its app. Tellingly, events revenue had begun to increase from 10% in 2010 to ~30% in 2014.
While in other industries there would be a second place, BookMyShow was a clear winner in a race that had no one.
Years of building and struggling in the theater industry had helped it build a “supply” side relationship with movie multiplexes, who were difficult to onboard for new players. Customers had been attracted through years of marketing, and BMS has built a toolkit to deliver a fantastic experience.
It owned both demand and supply, and it could get even more aggressive.
With $25MM of revenue in 2015, the company was selling 50MM tickets a year, with an average take home of $0.5 per ticket.
BMS would soon catch companies that bolstered its strategy. In 2015, it would buy Eventifier for $2MM, to help get deeper into the events business. It would follow up with an acquisition of Fantain group in 2016.
In mid-2016, the company would raise another $100MM, after a $20MM raise in 2015. Revenue would continue to grow unabated in 2016, being $50MM at 2x from 2015’s. BMS would end 2016 having sold record-breaking 3MM tickets on a weekend for the movie Dangal (that would also break records)
BMS catches would continue, as it would acquire MastiTickets and self-service platform TownScript. TownScript, run by Sanchit Malik and Sachin Sharma, would be indicators of the company’s long term strategy.
BookMyShow was not a movie ticketing company, but an events management company.
From 0% in 2008, to 40% of revenue in a 20x larger business, events had clearly been the fastest growing part of the BMS business. While everyone thought the company was emulating US’ Ticketmaster, the real business BMS is trying to be is LiveNation.
It would not take a genius to guess that TicketMaster is LiveNation’s subsidiary.
While BookMyShow took 10% of the movie ticketing sales, events, which are a $1Bn business itself, is BookMyShow’s “high margin” product. Like Swiggy’s cloud kitchens, hosting and managing events allows BookMyShow to monetize its ever-growing customer base even better.
But another giant would come nipping for BMS’s core.
Bowling at Death
PayTm’s getting into the movie ticketing business in late 2016, would accelerate in 2017.
The impact on BookMyShow’s core business would be telling, as the company’s growth would be slowed. It would grow from $50MM in 2016 to $65MM in 2017, with growth coming from the non-movie business.
PayTm’s large customer base and cashbacks would eat into BookMyShow’s revenue, even though the overall online movie purchasing customers increased.
From having virtually no competition in the movie ticketing business, BookMyShow would see 13MM tickets sold on its platform, and 5MM sold on PayTm. PayTm’s attempt to build an ecosystem of services around a wallet was driving this strong push into everything including movies, airlines and even gold.
But, BMS was well placed to bowl at death.
In what was a prescient move (remember 2009’s IPL?), BMS had been building capabilities to ticket for events for a decade. Events and their management is a more intricate and complex activity than “standardized” movies, and BookMyShow was already two steps ahead of its competition.
It expected competitors to attack its lucrative “monopoly” on movie tickets, and it was well prepared to combat it.
BMS saw its first year, earning revenue from live events, as it continued to build out like LiveNation. It partnered with large festivals like Supersonic, to continue bolstering its events revenue stream.
BMS looked set to win big, building on its movie ticketing dominance.
The company kicked off 2018 with $100MM, inching it closer to unicorn dom.
2018 would grow by a larger quantum, and the company pushed the non-movie business even more aggressively. As one would expect, BMS started to expand into other markets such as Middle East and SEA, while producing live events in the hunt for even better margin.
With big plans, BMS looks set to continue to expand.
Selling more than 15MM tickets a month with more than 30MM+ customers, the company has gone a long way from its start-stop-start 20 years ago. At a close to ~$80MM of revenue, the latest round values the company at 12x revenue, or ~1x GMV. The implication is that BMS is expected to grow significantly.
With a $4Bn domestic market, and significantly large markets in the Middle East and SEA, the company looks poised for growth. Having weathered market meltdowns with the ability to pull through built-in its DNA, BMS looks set for a bright future.
BookMyShow has built a $1Bn Big Tree, magnificent, robust and enduring.