Kal Raman: The deal maker

Kal Raman says his assistant has strict instructions to book him only into hotels which have a good gym. Photo: Sneha Srivastava/Mint

 Seema Chowdhry  Live Mint SAT, AUG 16 2014. 12 02 AM IST

This COO thinks an MBA is a waste of time, and can deconstruct the recipe of Saravana Bhavan’s ‘sambhar’

As we shake hands, Kal Raman, chief operating officer of Groupon Inc., an e-commerce website that offers daily deals at restaurants, retailers and service providers, launches into some of his favourite one-liners. “Hi! I am Kal Raman, short for Kalyana Raman Srinivasan. You know, America gave me everything but took away 50% of my name...”

Seattle-based Raman, born and brought up in Mannarakoil, in Tamil Nadu’s Tirunelveli district, lost his father when he was 15 and studied under streetlights to complete his schooling; his mother brought up four children on a pension ofRs.420 a month; Raman went on to qualify for medical as well as engineering colleges, but chose the latter as it meant leaving for Tirunelveli for “bigger, better” Chennai; on completing his engineering degree, Raman got a job withTata Consulting Engineers Ltd in Mumbai and reached office on the first day in slippers because he did not have money to buy shoes—all this is superb material for an article (who does not love a rags-to-riches-through-technology story?), but there is a small problem: Everyone knows this side of Raman.

Illustration: Jayachandran/Mint

It is obvious that Raman, 45, has to be taken out of his comfort zone, and a breakfast interview at the posh Shangri La, New Delhi, is not the way to do that. I suggest heading to the nearby Saravana Bhavan in Connaught Place, thinking Raman will dilly-dally. But he likes the idea. “At least I will not have to drink cappuccino. I asked for filter coffee, but they did not have it.”

We discuss taking an autorickshaw to the venue, much to the amazement, dismay and sheer shock of his India team. Raman turns to borrow some money from his team (he had no Indian currency on him). Even as I tell him that he needs none, one of Groupon’s managers in India springs into action and organizes his car to take us.

On the brief journey, a profusely sweating Raman (“It takes me a few days in India to get acclimatized to the heat”) reveals that he has a craving for strong coffee because he has hopped five cities in eight days and is jet-lagged. Later in the day he will be leaving for his sixth city, Bangalore. “I have to escort my mother-in-law to the US,” he says, mopping his brow.

Dressed in sneakers, jeans, a grey shirt and blazer, with a Garmin Vivofit fitness band, Raman does not even look at the menu at Saravana as he orders mineral water, pongal and filter coffee for himself in Tamil. I settle for vadas.

“Nowhere can we (Indians) go and pay the (full) price. Indians are used to a deals-on-deals culture. We have to train our people to say “No” to more negotiations. That’s why I think this country is a beautiful long-term bet for Groupon,” says Raman. Since it was rebranded in India in 2012, Groupon has worked with more than 30,000 merchants in 12 cities and has sold three million coupons, he says.

“Groupon will work in India for two reasons. More than 80% of retailing and services is not organized, unlike in mature economies, and our core philosophy is about working with small/medium businesses and growing their businesses through technology and the power of marketing.

“Also, we are a mobile commerce company. In 2013, we had $2.6 billion (around Rs.15,860 crore) revenue and more than 50% of our business came from mobiles. And India is big on mobiles already.”

"IN PARENTHESIS: Growing up I could not afford to play cricket, says Kal Raman. When he could afford to, he enrolled in a cricketing academy in Australia for 10 days, “so that I could become a better player. I am an off-spinner who bowls ‘doosras’ and I open the batting for my team or go one down. I have bowled to Michael Clarke (around 2001) before he got selected the first time for the Australian team and I got him out during net practice. I still have his autographed bat. Every time I go to England, I take my cricket kit bags and do net practice at Lord’s or the Oval. In fact, three-four months back, when I was in England, Kieron Pollard was recovering from injury at the Lord’s Nursery Ground and I bowled to him too.”"

For the Indian market, he says, Groupon’s approach is to be patient and methodical. “Sometimes that may seem like we are slow and not doing well. But we believe (being in India) it’s like running a marathon. It doesn’t matter who comes first in the beginning; the one who comes first in the end matters.”

Perhaps that is why he has said no to the TV-advertisements route for Groupon India. “It’s easy to get distracted by the noise in India—that company is doing this, or this is doing that. I’d rather we grow in a fiscally prudent way right now so that we can sustain in the long run. I do love the creative way in which my Indian team thinks, though—that Rs.9 per kg sale during the onion crisis (prices were touching Rs.80-90) in Delhi last year was an amazing idea.”

But hasn’t the Groupon model been written off time and again—in late 2011, when the share prices fell sharply, and in 2013, when CEO Andrew Mason was fired? “I would not have joined the company in 2012 if I had believed that assessment. Yes, the company was not doing well, but I like to be in the position of an underdog. If you are the underdog, there’s only one way to go and that is up.”

There are two things naysayers have to say about Groupon. One, even though this model makes money, it is so easily replicated that the company will go out of business. Two, big companies that have tried it have pulled out. “Groupon has survived 1,400 copycat sites since its 2010 launch and we are still here and active in 48 countries. People conveniently forget that this is the fastest-growing business in the history of commerce. Our strength is our scale,” he says.

Raman, who has previously worked with Wal-Mart, Drugstore.com, and Amazon, and set up GlobalScholar (now Scranton), says working with Wal-Mart founder Sam Walton and Amazon.com CEO Jeff Bezos has given him an insight into the retail business that no management degree could ever have. “An MBA is a waste of time. If you want to be impactful in life, learn to be a problem solver. ‘I don’t know. Please teach me’ is 10 times more powerful than having an MBA.” Be shameless and ask questions and be a relentless learner. I am still like that,” he says.

In fact, he says he doesn’t mind learning from the competition either. “I like the personalization methodologies Amazon is using. Google does a great job of doing everything simply—one or two steps and you are done. We have looked at the interfaces they have built for their merchants.”

He says Walton and Bezos taught him how to always work backwards, from understanding what is good for merchants and customers first. “Sometimes what is good for the business will not be good for them and that is not a path to take. You need to have a long-term mindset and truly believe that in five years you will be the category/market leader. It doesn’t matter if you lose money initially, but remember never to pass your problems to your customers.”

His need to learn is what made Raman decide not to look for another CEO’s position after he quit Drugstore.com in 2004. “I became a CEO too soon. Along the way I forgot how to empathize with the problems people face. As a CEO you work on 20 things and say, ‘I don’t care, go make this happen.’ People will make it happen, but they may make the wrong things happen. Sometimes common sense becomes uncommon when you are a CEO and you end up spending a lot of time with the board, shareholders, etc., and end up optimizing for (them). At Drugstore, even though I was the most powerful person in the company, I found myself in a situation where I could not get exactly what I wanted. Good leaders are never a victim to circumstances and there I felt like one. That’s when I knew I had to step back and redo things. When I got an offer to work with Jeff, who was on my board at Drugstore, as a senior vice-president in Amazon, I took it up. I only told Jeff, don’t micro-manage me.”

Raman does take his “be relentless and learn” mantra just about anywhere. These days the focus is on his new hobby—cooking. He says he can re-engineer his way through any recipe he has tasted once (he did deconstruct the recipe of Saravana Bhavan’s sambhar). Another thing that he wants to be better at is cricket. In fact, the last deal that he bought on Groupon was an hour’s time in a baseball batting cage in Seattle, only he did not take baseball bat. “I used my cricket bat.”

He plays cricket every weekend in Seattle. “In 2001, I started a league in Seattle and now we have 110 teams, out of which five are for women and five for kids,” says Raman, who still regrets not having bid for the Chennai Indian Premier League team. “I am now looking at buying a badminton team in the Indian Badminton League. I believe five years down the road, badminton will be the largest sport in India.”