Synopsis
InMobi, which Tewari cofounded with fellow IITians in 2007, competes with Google, Facebook, and Apple, in the market for data-driven mobile ads.
It was arguably his most important business pitch and Naveen Tewari decided to go for broke. The cofounder of mobile advertising technology maker InMobi asked Japanese billionaire Masayoshi Son to invest $250 million (Rs 1,500 crore) in his startup, which until then had received about $15 million (Rs 92 crore) in venture funding. After several confabulations Son, the chief executive of SoftBank, agreed to invest $200 million (Rs 1,237 crore at current rates) catapulting Tewari's then four-year venture into instant stardom with a valuation of over $1 billion (Rs 6,100 crore).
Recounting that tale to a gathering of hundreds of aspiring entrepreneurs at a recent technology conference in Bangalore, Tewari, a dapper 35-year old, said, "I think the moral of the story is just ask. You don't know when and what you will get." This ability to think big and act has pitchforked InMobi, which Tewari cofounded with fellow IITians in 2007, onto a global arena where it competes with Google, Facebook and Apple for top honours in the market for data-driven mobile advertising.
"We are basically one of the largest players in the planet that understand user behaviour, more deeply than what psychologists ever understood or psychiatrists ever understood," said Tewari of his company which aims to help some of the world's largest brands deliver the right advertisement to the right person, at the right time. Last month, it said advertisements were delivered to 759 million mobile users globally, second only to Facebook.
By offering such a compelling case for brands to enlist its services, InMobi, has notched up a marquee list of customers, including Japan's Yamaha Motor Co, Microsoft, sporting goods maker Adidas, fashion brand Lancome and retailer Macy's.
What InMobi does is offer a perspective about customers to advertisers, by sifting through data that users constantly generate. For instance, if a person downloads an auto app, chats about it to friends and visits a car showroom, InMobi combines the disparate information to build a profile of a person looking to buy a car.
"We are a data company not an advertising company," said Tewari who graduated from the Indian Institute of Technology in Kanpur. While ads popping up on a mobile device can be intrusive, experts estimate this is a business that will only grow. Global mobile advertising spending is forecast to reach $41.9 billion (Rs 2.56 lakh crore) by 2017, up from $18 billion (Rs 1.1 lakh crore) in 2014, according to research firm Gartner.
"Most people get irritated with irrelevant ads. This is changing now as relevant ads are displayed especially in developed markets" said Neha Dharia, an analyst at research firm Ovum. "In emerging markets users are still being spammed,' she said. It is such growing demand for sophistication that mobile advertising technology makers inlcuding InMobi are targeting.
"Our thinking is that advertisers should be able to target not devices but people," said Praveen Sharma, director for performance advertising at Google's Asia Pacific division. Facebook too has transitioned to being a mobile first company, where products are developed for mobile phones first and other platforms later. It had 945 million mobile monthly active users as of last December. "Mobile is the new frontier for marketers," said a Facebook spokesperson.
To ensure that it continues to compete at this level, InMobi has launched several innovations in recent weeks. It offers technology for app developers and mobile publishers to deliver ads that mimic the feel of those being already being used by a consumer. It can also now display videoads, earning revenue from advertisers every time a user views or clicks on an ad.
With about 800 employees across the world, InMobi is now a fast growing company. Its revenue has grown by 73% year-on-year to reach $104.3 million (Rs 645.51 crore) with a net loss of $84.5 million at the end of March 2013, according to Accounting and Corporate Regulatory Authority, Singapore, where the company is registered.
When asked if he considers InMobi as a rival, Google's Sharma said, "We've invested in this area for over a decade, which puts us in a great position—through acquisition and product development."
For the Bangalore-based firm, competition is also coming in from newer ventures such as American firm AirPush as well as Nasdaq-listed Millennial Media. Also in the fray is three-year-old startup MoPub. To make sure the tempo stays up, InMobi is doing more than just staying at the cutting edge of technology.
At its Bangalore office the décor smacks of mobile devices, there are tablet-like contraptions suspended from the walls and conference rooms named after mobile games such as Temple Run. And a town- hall on most Friday afternoons that Tewari rarely misses.
It's been a hard-fought battle so far. Teaming up with IIT alumnus Amit Gupta, Mohit Saxena and Abhay Singhal, Tewari set up mobile search venture mKhoj from a single- bedroom flat in Mumbai during 2007. "I really liked the team from day one. There was clearly a deep desire to do something big," said Sasha Mirchandani, cofounder of Mumbai Angels which invested $50,000 in mKhoj.
But the model failed to take-off and the team pivoted to build a mobile-web ecosystem, running the company on personal credit card borrowings.
Tewari an active speaker at startup events told one such gathering that he and his team, survived by paying minimum fees on about 14 credit cards, until they raised initial venture capital. "The unique thing that I found about him (Naveen) has been his persistence and nimbleness," said Sachin Maheshwari, director at private equity firm Zephyr Peacock, who has known Tewari since IIT Kanpur. InMobi raised $7.1 million from Kleiner Perkins Caufield & Byers and Ram Shriram's Sherpalo Ventures in 2008. Two years later, existing investors put in $8 million in the firm.
With money in the bank, InMobi began to focus more on intellectual property confident that digital advertising was all about technology and not putting tons of sales guys on the ground. "I knew the initial mKhoj model would not work. He (Tewari) knew it to an extent too. The business model could change, but he wanted a solid team from the beginning," said Piyush Shah, who now leads product development at the company. A former Deutsche Bank employee who met Tewari through a common friend he joined after much insistence "Every six months, he would come back to cajole me to join ... and I really love him for that," said 35-year-old Shah. What also helped was the decision to drum up business in emerging markets and to look East, before turning to the West. "Naveen (Tewari) adopted a fantastic strategy. They were strategic in their approach to go to undeserved markets such as China and India and now they can go to any part of the world," said Ravi Gururaj the head of Nasscom's Product Council.
Boosted by Softbank's entry in 2011, the Japanese company owns about 35 % of InMobi according to reports on its website, Tewari and his team adopted an aggressive product strategy by acquiring mobile technology companies such as US-based companies Sprout, MMTG Labs, UK-based Metaflow Solutions and Overlay Media.
It has also hired aggressively, by poaching talented people from Google and Yahoo such as Nyong'o Madison, Phalgun Raju, Anne Frisbie, Rob Jonas and Stephanie Sarofian. As growth picks up for mobile advertising technology providers they will be confronted with concerns about safety of data said experts. "InMobi's business model is based on collecting personal information, which is worrisome from a privacy perspective," said Sunil Abraham executive director of Centre for Internet and Society, a thinktank.
"If a leak happens in an ecommerce firm or a bank, only a certain number of customers will be impacted but here we are talking about millions of mobile users, whose profiles can get leaked," he said. InMobi said it does not gather personally identifiable data, but it does have information about what type of device is being used to download particular apps and also the frequency at which the user clicks on an advertisement.
Industry experts who expect InMobi to soon earn revenues of over $ 1 billion rank Tewari amongst the new breed of confident Indian entrepreneurs. "The most striking quality is that he goes after moon shots," said Sharad Sharma cofounder of software product think-tank iSpirt."