Desi software product company takes global tech giants head-on

Last Updated: Mon, Nov 19, 2012 05:28 hrs

In the fledgling software product development space in India where entrepreneurs change their focus quite often and even abandon their dream ventures while going through the grind of the start-up phase, InMobi, a mobile advertising platform and solutions provider, stands out as a beacon of hope.

The Bangalore-based company, which once struggled to meet its operating expenses through credit cards of its founders and small funds raised from angels and friends, is now giving a tough time to players like Google Inc and Apple Inc in the mobile advertising space.

The five-year-old company that raised $200 million (Rs 1,100 crore today) from Japanese media giant SoftBank in September last year, today stands next only to Google in the mobile advertising space, dealing with 100 billion mobile advertisements every month, which it presents to over 800 million users spread across 160 countries. Even though the company does not share its revenues figures, it may have well crossed the $100-million mark, according to industry insiders.

Founded in 2007 by three passouts from Indian Institute of Technology-Kanpur, InMobi has gone through its phase of turmoil that every start-up sees in the early phase, starting from getting the perfect business idea to getting access to investors. But that phase is over, says Naveen Tewari, co-founder and chief executive officer of the company, adding that the "marathon is still on".

The next big target before the company is to become the number one player in the mobile advertising space - which means it will have to overtake Google that derives over $1 billion in revenues from this space.

Tewari says mobile advertising is InMobi's only focus area unlike most of his global competitions including Google, whose interests are spread over multiple markets.

"If you build good products and technology, and if that is the only job you are focused on, you will do better than them (competitions). And that's what we do; we do better jobs in this business," says Tewari, who co-founded the company with Abhaya Singhal and Amit Gupta.

With Facebook planning to foray into this space banking upon its huge user group, the competition will be tougher, he adds. "But the market is also too big. There is space for many many players."

According to industry estimates, over the next 10 years, cumulatively around $500 billion of ad spend is expected to happen on mobile phones. "We want to have a share of that. We have a bigger picture there; we are going after that big pie and that's what excites us," adds Tewari.

InMobi has tripled its headcount to about 750 in the last 12 months, apart from increasing the number of products eight times. It has expanded its presence to 30 from earlier 10. Apart from the iOS and android devices, the company has also started offering the platform on Windows.

"There is growth across all these dimensions and that's the beauty of this space," says Tewari.

Early days
Days were not as rosy five years ago as it is now for Tewari and his team. The co-founders started the company from a single bed-room flat in Mumbai as home-office doing everything by themselves -- starting from day-to-day household works to software coding and marketing. The initial focus was to develop an SMS advertising platform. But that business did not click, and subsequently, the co-founders changed the business model twice before zeroing in on mobile advertising.

Whatever little money they had raised from friends and a few angel investors also got dried up. For a period of about four months, they managed with zero account balance before getting its first venture capital funding from Kleiner Perkins Caufield and Byers and Ram Shriram's Sherpalo Investments in 2008. Both these funds had also backed Google in its early stage.

"That was the period of uncertainty. One always has a feeling as if he/she will die the next day. So you have to do everything for survival. Then, once you come out of that survival phase, you have to go to the scaling phase. It is a marathon. You get tired, burnt-out, but none of that affects you because you are trying to go after something beautiful in life," recalls Tewari.

Power of Mobile
The year 2007 was a bit early to think about mobile phone as a platform to host advertisements. But one thing InMobi's founding team realised that cell phones are going to be all pervasive and more number of users will use those to access content.

InMobi has developed platforms which enable advertisers to put their ads with content owners and publishers who offer content on the mobile platform. Mobile advertising companies like InMobi act as intermediaries between the advertiser and the content owner or publisher. It's works on a revenue sharing basis. For example, if one advertiser is giving an 'X' amount for each advertisement, mobile advertising companies typically keep about 40 per cent of the amount while the rest goes to the publishers.

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