Indian e-commerce company mjunction connects B2B buyers and sellers through online marketplaces and auctions. It all started with steel — at the time the dotcom bubble was bursting. Today, mjunction drives transactions for rough diamonds, tea, oil and gas, media rights, and more. In this episode of Mastering Innovation on SiriusXM Channel 132, Business Radio Powered by the Wharton School, Vinaya Varma, CEO of mjunction, talks about how the company scaled up to about 1,000 employees and what’s next.
Mjunction’s partners range from India’s cricket board (for media rights) to large infrastructure companies searching for suppliers. Varma explains how the company thinks about competing with Amazon and Alibaba, investing in new technology like blockchain, attracting millennials to work there, and prioritizing innovation.
An excerpt of the interview is transcribed below. Listen to more episodes here.
Vinaya Varma: It took a great while to convince the cricket board of India, which is one of the wealthiest sporting associations in the world, that they could get a better realization for media rights and do that much more transparently through an e-auction mechanism. And, you know, the event was hugely, hugely successful. We are recently helping the government of India also allocate oil fields and gas fields through an e-auction process.
Saikat Chaudhuri: Fascinating. How do you nurture innovation in your organization? Because coming up with the next new area, especially if it’s moving away from traditional commodities to sports and other areas, it might not be so easy. How do you come up with that? Of course, you have to keep your platform very, very innovative too. You have to think about algorithms and that part of the auction. But you also have to think about new fields where you can apply this tool, like you call it. How do you do this in an organization?
“I believe that innovation, driving innovation is my single most important agenda.” – Vinaya Varma
Varma: Well, Saikat, to be frank, we are still learning in terms of the perfect formula. But in the journey so far, what I have found is that, we have a significant portion of millennials in our organization. And we just want to have an open-door policy. And I believe that innovation, driving innovation is my single most important agenda. And I encourage millennials in terms of talking about their ideas, their suggestions, parts for improvement. And that’s how, that open culture, open door, that is something which is working well so far.
Chaudhuri: So it’s clearly leadership and having vision at the top, and the openness for ideas is very important. How do you attract these millennials to come work for your organization? And are there incentives in place that encourage this kind of innovation? How have you set it up?
Varma: That’s a very good question, Saikat, because before we set up this company, I had come from a very traditional enterprise. Steel making — nothing can be more traditional than the steel industry. But we went around and we found what millennials appreciate, what millennials value in an organization. And we’ve implemented those concepts here. So if you visit our office, the most happening place in our office is the cafeteria. It’s practically 24 by 7, and that’s where I believe that most of the creative ideas take form and germinate. So we have a flexible working style, informal atmosphere, work from home, and those things. And of course, in India — I’m sure the same thing would be all over the world — is millennials need faster progress on their careers. They need change in the designations every couple of years. So these are things that, I won’t say that we have got a fix on it, but we are so far doing well on that.
Chaudhuri: You make it sound so easy, and the success is very evident not only in terms of transaction volume. You’re highly profitable compared to all other e-commerce platforms that we mentioned, in particular in India, but what are the challenges that you face?
Varma: For me to explain this, let me give you background. When we were set up, that was the time that the dotcom bubble burst, and our promoters understandably had serious doubts whether this venture would actually take off. So they said, “OK,” and at that point in time, the only funding which had come was a fraction of what was supposed to be a total funding. It was just US $2 million, and we were told, “Look, guys, that’s all that we have for you.” Actually, you know, if they had their way, they would have pulled back but they didn’t want to disappoint us.
“Well, most global players, the big players, are eyeing India, and they have their India strategy.” – Vinaya Varma
Chaudhuri: How good of them — and how insightful.
Varma: So they said, “Look, there’s nothing more that we can give. We have given you these US$ 2 million. When the money is over, then you guys come back and get back into steel making.” We didn’t want to do that. So to be profitable was our number one priority and that’s the reason that everything that we did — we started in a very small scale as a pilot and only when the operations became profitable, then we scaled up. So except for the first year, you know, we have been profitable the last 17 years.
Chaudhuri: That’s remarkable. That’s really fascinating, right? And the streak that you’ve had and the challenges, when you think about the competition domestically, but also internationally, you know, Alibaba is huge, for example. How do you think about the competitive set? Are they also part of your competitive set? Are you focused on India, other places? How do you conceive of that?
Varma: Well, most global players, the big players, are eyeing India, and they have their India strategy. So Alibaba is present in India in a B2C format through their partnership with Paytm. And Amazon is entering this space through the Amazon Business vertical. Now, we understand and we have a lot of respect for these two very, very successful organizations. But we think that we have very keen insights in terms of how business operates in India. And that is what we are going to be leveraging and relying on. To give you an example, in a business in India, if they want to buy maintenance, repair, and operational items, take for example fasteners, they just can’t go to a website and start ordering.
Varma: So the transaction has to be routed through their purchase department. There has to be pre-quotations to ensure that the bid is competitive, and it has to be routed to the ERP systems. So that makes it very, very necessary for our systems to be able to talk to their ERP systems. In many cases, the organization can make all the connections to the outside world through their ERP system — they never come to our websites. OK? So that is one example in terms of how our approach is designed for Indian businesses.
About Our Guest
Vinaya Varma is managing director and chief executive officer of mjunction services limited, and has been a core member of the founding team since inception in 2001. At mjunction, he has been instrumental in conceptualization, launch, and ramp-up of some of its largest businesses. The company has service offerings spanning the entire B2B e-commerce spectrum and covers e-sales, e-sourcing, e-procurement, e-finance and loyalty solutions, and more than 200,000 entities transact on these platforms.
Varma is a B. Tech from IIT Kanpur and has completed his Advanced Management Program from IIM Calcutta, India. Prior to joining mjunction, Mr Varma was at Tata Steel, where he worked in several functional areas encompassing production, planning, sales and marketing. In 2012, he was nominated for Tata Strategic Leadership Management Workshop (Harvard Business School), which is designed for select senior executives of Tata group and its subsidiary companies. He is a Certified Professional in Supply Management (CPSM) from Institute for Supply Management (ISM), USA. He is a practitioner of Theory of Constraints and has attended several sessions of ToC at Goldratt House, Tel Aviv. You can find more at @vinaya_varma.
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