InMobi: Netting the advertising dollars

Written by Anand J | Updated: Jan 20 2014, 21:13pm hrs
InMobiBangalore-based InMobi has fast emerged as one of the largest mobile advertising networks in the world. (AP)
Bangalore-based InMobi has fast emerged as one of the largest mobile advertising networks in the world. As early starters, InMobi is giving internet advertising giant Google a run for its money with its revenue expected to touch a billion dollar by the end of this year. Its founder and CEO Naveen Tewari wanted to create a product that is impactful and is now also running a NGO in the field of education. Here Tewari, whose parents were all professors and wanted him to be a teacher, sits down with Anand J on his entrepreneurial journey and the fast changing market. The company which began its journey as mKhoj, a mobile search product, moved to Bangalore to become a high-end technology company that attracted $200 million from the Japanese telecom giant Softbank in 2011. While he says the company is ready for an eventual IPO, it is not imminent as the company has enough cash.

Product focus

Our focus is on creating great products that customers like. We know that we have a chance of putting India on a global map of internet technology company. The other thing is that we are an India based company and the digital ad market business is not that well understood. Therefore somebody to come and say, we love this business, is a bit hard. Eventually we will become larger and people will come to know. It is a large company in

India but lot of our business is coming outside of India.

On changing tack

The distinction with that would be, am I going to get to a certain milestone with that or not and take a hard look at it. We did and looked at that part of the business, the size of the business it was going to create for us. Is that going to be exciting enough for us to devote yourself for the next 10-20 years If that is not size-able enough and impactful enough and not going to change something across the globe, we are not interested in doing that and therefore we changed the business. And luckily all the investors and supporters of the company supported and we changed it.Lot of entrepreneurs dont get into the business saying let us think about the business over six months and your thinking evolves as you get into it. Six months later, you would think, even if it is successful, it is not going to be impactful. Is that making money is not the right thing, as you will always make money. Can you sit back and say that the product we created is impactful.

On seeing the mobile advertising market early on

There was a large belief that there are a few macro things that are going to change. It was just a belief as there was no data points to prove it. Reports at that time would not have said so. Belief is what entrepreneurship is about. There was no Android and Apple was a device which just got launched and there was no app store. The macro view we had was, phones will become a primary mode of communication and content consumption in developing world. PCs will not see the light of the day. Devices price will come down and will become smart. Data costs will also come down and will have higher speed. All these things put together and for a young country like India, you need multiple pillars for the ecosystem to exist on and advertisement will be one among them. Fortunately, this has gone far beyond our belief, which is even better. Then we said, let us try to become the best across the world and not just in developing world. PCs are on a slowdown; people never predicted that. We did not had that level of prediction; our hypothesis was more on the positivism around mobile, not the decline of PCs.

On Indias mobile revolution

I moved to India from US because of this. I did that because of the philosophy that it is going to change in developing markets. Yes, there will be a larger market in the west, but from a user perspective, it was going to be phenomenally large in a developing market. So if we could develop something for the developing market that would be great. In the first two and half years, we were only in the developing markets and never in advanced markets. But we gained phenomenal scale and became the number one player in developing markets gaining large market share.

Entering new territories

Then we re-looked at the trend we predicted is larger and is going to impact the West and not just the developing markets. We have an opportunity and have an early mover advantage. So went into Europe, Japan and eventually into US, China, Korea, Australia. This was in 2009-2010, much before the Japanese Soft Bank investment. By 2011, we were very much an entrenched outside of US and China. Then we got this Soft Bank investment and scaled it to the next level and in possibly every country of the world and we are the largest layer in China and third largest in US. We have been in China for only 14-15 months and were the 55th player when we entered. In Australia, we are number one, Korea, we are number two, Japan we are number three, in France we are number one or two, in UK, we are number two.

Capital gains

One idea is developing markets. The reason why we entered these countries is because we have a platform called self service. Advertisers and developers could come on to the platform. And the market from which we see maximum activity, we would open a centre there. Then we went into Europe and is not that competitive as US and we might go a different route of going to US. Within Europe, UK is an easy choice because it is the largest market. Japan probably because we found somebody who is great. Lot of it has logic but ultimately it is about how competitive we are going to be in the market, how large is that market and finding the right people in that market. In China, first we thought we will go with a joint venture but found that we can do it alone and we see good results today. We are not setting up any infrastructure. It is only people costs as technology is already built and the incremental cost of setting up a new office is not that high.

Global competition

It goes back to the idea of India as a market that is not necessarily that large evolved in the digital space and therefore buzz in this space was limited in India. The size of this space is between $30-40 billion in three years from now. How can we as a player get 10% of the market. In the world, every digital dollar today is being thought of as a mobile dollar first. People are still figuring out as how to move the PC dollars to mobile space. Despite the fact that we know everyone in India, most of our money is coming from US and other countries. If we look at from 2007-08, when we started out, every year four or five large companies have gone away. This business is all about huge scale. Today if we leave out four or five top players out there, there are a bunch of fringe players out there and we are glad that we are one of the top four or five.

Leap of faith

Our story is known better outside of India as a product in which lot more people are interested in. The leap happened in 2010-11, when we have moved on to become a size-able player. Every year we have grown 2.5-3 times and there has not been an year when we have grown less than that. Leap is in two or three phases.

Larger picture

Three things: one the headroom. The market has to be large enough for us to grow and that is the case for us and there is no cap on the size of the market. Second is technology. Do we have the best technology in the world for our customers, absolutely yes. If you go around the floors here, you find large number of best engineers of the country here probably because there is no other company in the country that is doing the level of complexity of building technology that we give to our people out there. In a scale of one to 10, if InMobi is at 10, the next Indian technology firm is at one. Third one is very relative. It is the people. The passion with which people who work here to build one of the largest internet companies in the world out of India.

Talent game

It is in the DNA. Everyone ensures that a high quality person is coming inside. Because you have supremely talented people in the company they dont like to work with mediocre people.

On changes in the Indian market

People are moving from traditional to digital. The movement to PC is taking longer to realise that. My assumption is that 80% of the movement has to be mobile and we are already seeing that in pockets. I am not trying to take share away from here, but my concern is how large our market is going to be.

On Google-Apple duopoly

The app component of this is open for other players like Inmobi. I dont think they can close that because closing that is difficult with legal complications. There is a bit of challenge, but Apple is not in that space. iAds are too small. If Google closes it, everybody will close and they will lose a much larger market and they wouldnt want to do that. I think, we will have three or four operating systems finally.