Last fortnight, InMobi was in conversations to raise $250MM for its rapidly growing business Glance, hot on the heels of Roposo filling the void left by TikTok.

Starting on the Front Foot

Naveen Tewari was destined for a career in academics.

A family of highly acclaimed academicians, Naveen’s father was a professor and dean at IIT Kanpur. Naveen’s grandmother was a professor of Math at the same institute, being the first woman professor in the history of the IITs.

Contrary to expectations, Naveen’s father convinced him to pursue options outside of academics. 

Naveen landed up in management consulting, which would be his first and last job.

Soon after, he left consulting to pursue an MBA from a certain business school in Boston. The BSchool experience opened up Naveen from the more conservative, middle class mentality.

Business school was also where he would meet one of his co-founders, Mohit Saxena.

Banking on his new found confidence, Naveen shunned the cushy lifestyle of working in big brand name corporates. Instead, he ventured into the world of startups. 

After his graduation in 2005, he thus dabbled with different ideas. These endeavours did not take off, and Naveen had very little to show for months of effort. 

One thing he invested in, more by chance than choice, was building a deep connection with his eventual co-founders during this time.

As the experience of starting up would be a challenging one, especially after a stellar academic and professional career, these relationships would become Naveen’s anchors. 

But the challenges were just about to begin. 

Almost Getting Stumped

The journey he had embarked on was full of uncertainty, and implicit societal pressure. 

Having charted out a stellar career till then, this new decision was unique and perhaps unexpected. With friends doing well in stable corporate careers, Naveen would be grappling with anything to show for.

During this period, there were some learnings which any founder would relate to. 

In a world where people are used to short term gratifications, it would be important to convince oneself in their 20s that gratification would come later. In this real, or false hope, he continued to push on his startup. 

In 2006, before Jiofication became mainstream, data was still expensive in India. 

Mobile internet was not for the masses. Text communication was dependent on SMSes. Naveen realised that there may be a business proposition in doing search on SMS. 

MKhoj was born. 

But markets care very little about your struggles, let alone your background. After raising money for MKhoj, largely based on his stellar credentials and a business plan, it struggled. 

It had been two years since he had been experimenting with a plan, and his career. On this journey, he now had three other compatriots.

The team began to realize that while SMS’ were important, building for SMS was going against the tailwinds. 

MKhoj had to go in 2008, with the company having to pivot

But the reason to shut MKhoj was the thesis for starting InMobi - to ride this new emerging wave called the internet.

For internet usage to remain prevalent on the mobile platform, there had to be investment in the advertisement in this platform, so that the content would be free.

That is exactly what Naveen and his cofounders,  Mohit Saxena, Amit Gupta, and Abhay Singhal did. They built an advertising platform for the mobile application ecosystem. 

The ad platform’s model was straightforward, it would match companies wanting to place ads (buyers) to publishers with digital real estate who could host ads (sellers)

After 3 years of struggle, InMobi was born.

Pacing a Long Innings

Starting off in India, InMobi soon pivoted towards the larger South-East Asian market. 

This decision to go big, was eventually the first step for InMobi to become a big, truly global company. From a long-term lens, these decisions were not as strategic as they looked. 

During those early days in 2008, many of the decisions taken by InMobi was to stay in the game, by focusing on the levers that generated cash. 

As a startup, it is important to have a bifocal approach. A very strong eye has to be kept on the short term and then efforts have to be made to try and plan for the long-game. In this game, far-sightedness is pretty short in the early days.

From the beginning, there were a few drivers which InMobi focussed on getting right. 

Building a strong product, which can scale on its own without having to put a lot of people behind it, was of paramount importance.

Secondly, in 2008, when competitors in the US, AdMob and Google, were engrossed in their fight for supremacy, InMobi had the foresight to invest in and develop a robust data architecture. 

It had no challengers in the Indian market, and this quiet time was utilised to train for the battle for geo-expansion ahead.

Building for a niche without competition allows you to win.

During this time, InMobi had raised $7.1MM in venture funding. With this firepower, when many companies might have turned to the US to expand, InMobi looked towards other territories closer to home, for quick wins. 

It built a lot of momentum by winning in the South East Asian, Middle-Eastern and African markets. From 80M ad impressions in 2008, it had quickly sprung to 800M. Steadily, by mid 2009, it had grown to a team size of 60. 

With this spurt in team size, came a spurt in business. Internal standard operating processes had to be set up, and the founders realised that they had to let go of control. Scalability required decentralisation, and this growth machine could no longer be controlled entirely out of Bangalore.

Then came the financial downturn of 2009. While this avalanche swept away two-thirds of the competitors in the US, InMobi became confident of stepping on the gas to march its way to the developed markets in Europe and Japan, almost unchallenged.

So far, having done business primarily in the emerging markets, there were naysayers within the organisation and outside, who raised questions about its expansion into these new geographies. 

But Naveen’s can-do attitude, picked up from his B-school days, and his dream to make it big, led him to undertake trips to London, Madrid, Munich and Tokyo. 

The end result of these trips would be successfully opening up shops in these locations.

Hitting a Double Century

In a declining global economy, InMobi was expanding.

Even though market entry was successful, the long run success is not a function of the strategy, or that of the competition. It was the ability of the team to execute. 

That was why through the early 2010s, key senior hires were made for APAC, US, Japan and Africa. Singular focus was to hire, develop and retain local talent, and outsource responsibilities to the region, so that the team is set up to eventually succeed. 

For InMobi to become truly global, it needed to have local talent running regional businesses. 

In 2011, Inmobi raised $200MM in funding as part of its Series C, which was at the time one of the biggest ever fund raising by an Indian company. 

Inmobi became India’s first unicorn, long before any young startup founder had heard of the word. In fact, the word unicorn was only used to describe a mythical, horse like, animal 

At that time, Flipkart was just entering into electronics and personal care products, and hadn’t even come out with its mobile app yet. Paytm had only just started, allowing prepaid mobile and DTH recharge.

This was also a time when two moderately sized businesses, namely Google and Facebook, were both making yearly figures of $2 Billion from mobile advertising, less than 5% of what they make today.

Google would also acquire its largest competitor, AdMob for $750MM, a decade before anti-trust thought Google was doing untrustworthy things. 

AdMob also had the majority market share in mobile advertising with 89% of advertising enabled apps using AdMob compared to the 22% using InMobi’s platform. 

InMobi’s anchor investor, a telecom company pivoting to become a monster fund, claimed that the partnership would create the No.1 Internet company in Asia and would provide for massive global scaling in the mobile ad market. 

Recognizing the limited mobile advertising potential in India at the time, InMobi aggressively expanded its network overseas. 

Its reach was 340 MM users in over 165 countries as compared to the 1.5 MM users three years ago. Global smartphone impressions on the Inmobi network had increased 488% from 67 Billion in 2010 to 234 Billion in 2011. 

Within just 4 years, InMobi had gained credibility as the closest competitor to Google’s AdMob. The struggles till 2008 seemed to be finally paying off and InMobi went from strength to strength.

In the quest for adding muscle, InMobi started looking for it.

Building Partnerships

InMobi’s acquisitions would fuel its advertising numbers across the globe. 

The role of mobile advertising was becoming more and more evident. It would go on a spree of acquisitions that would follow would play a big part in this new market penetration.

Its 2011 acquisition of Sprout allowed advertisers to build and serve HTML5 content as advertisements. This enabled Inmobi to then roll out rich media production and distribution, a massive step up from the current text based advertisements.

The following year, InMobi acquired three more companies.

MMTG Labs would help drive mobile app downloads, MetaFlow Solutions were leaders in mobile app management and Overlay Media developed context-aware mobile technology. 

These would enable the company to strengthen and consolidate their product portfolio.

By 2012, Inmobi was on a high as last year’s mega fundraise gave this rocketship enough fuel to build on its tech muscle power, grow it’s global footprint and acquire companies that are in related business or geographies.

Inmobi was now ~500 people strong and to grow sustainably, it had to shift gears from being a small one office type startup to an MNC catering to employees of different cultures. 

The inorganic growth strategy of acquiring companies and integrating employees and products also made it super challenging.

The management team realized the need and had already started a decentralization process when they expanded to other countries. However, adopting a new culture is a mindset change and that requires time. 

But would they have time?

For a deep tech company like Inmobi, time is one currency that they are always short of. While Inmobi was growing rapidly as the mobile advertising market was growing exponentially, there was another challenge brewing with its competitors.

The fight was on both the fronts, short term to fight the competition and long term to build a culture which would make Inmobi profitable.

Inmobi would have to pay for the choice after a few years, whichever they took. In the near term they wanted to focus on the US based competition.

It wasn’t coming from known quarters, but a totally new angle.

Defending Lethal Bouncers 

By 2013, Facebook was exploding. 

It was no more a student networking site and had already crossed 1 billion active users.

Facebook was breaking every record set so far in the world of the Internet. Be it eCPM (cost one pays per thousand impressions of ads) or the number of daily active users available on any platform, Facebook was redefining the benchmarks.

If there was any competition that FB saw, they made an offer that one can’t refuse. In the coming years, photo sharing app Instagram and messaging app Whatsapp also became part of FB ecosystem.

Facebook was now ready to leverage their own platforms as well as other smaller apps/websites to provide advertisers in a highly targeted offering called Facebook Ad Network (FAN). 

It wasn’t that Facebook alone was growing. Another tech giant-Google was growing at an unprecedented speed.

Google was strong when it came to Search. They own it by a huge margin and Yahoo/Microsoft were not even close. 

Apart from Google search, increasing popularity of Youtube, adoption of Chrome and higher market share of Android OS, allowed Google to form a huge network solution - Google Display Network (GDN), which advertisers started using as digital marketing spends were ramping up.

For years, FB and Google were fighting tooth and nail to own every user on this planet. This had kept them more focussed on acquisition and monetization generally took a back seat in the early part of the decade.

Around 2014, both realized it was time to make money and FAN, GDN started giving tough competition to Inmobi’s advertising network as advertisers flocked to these platforms offering better ROI.

It wasn’t that Inmobi alone found it difficult to fight them. 80% of the market went to Facebook and Google and left over was up for a long tail of advertisers like Inmobi to grab.

While in most of the markets this was true, it wasn’t true for one market, China.

Finding the Gap

Inmobi had been building a global product for more than 5 years now. 

They expanded from Asia to the US and have well diversified their business across multiple markets spread in the US, Europe and Asia. Google and Facebook just blew the Western markets.

But the pain that Naveen and team had to go through while they were expanding to different countries was about to start paying them back in China.

By 2015, InMobi was getting about 30% of its revenue from China. Almost equal to what it was making in the US, their largest market. 

In China, a total of 460 million smartphone users were covered by InMobi, accounting for 80% of all smartphone users in China. With 15-fold growth in three years and a 140% compound annual growth rate during 2012-2015, InMobi was the second largest ad platform in China, behind home-grown Wechat.

One of the main reasons for InMobi’s growth was the ban on Facebook and Google in China, which allowed InMobi to flex its muscle in China.

At its core, Inmobi was an ad company claiming to be the largest mobile-first, independent, full-stack advertising platform. 

InMobi charges retailers and brands for use of its advertising platform and earns money each time an end user clicks on the advertisement and downloads the subsequent offering. 

InMobi claimed to have 2 main differentiators from other ad networks.

The first was local market knowledge and the second was providing its customers as much data as possible to allow for better analytics. 

The real gem though, would be its video advertising platform which provides immersive and buffer free video advertisements, claiming to drive better completion rates and higher engagement among users. 

InMobi’s China success helped them stay relevant in ad network business, however, there was another storm brewing at home.

Slogging Through Googlies

After a never seen before funding boom of 2015, Indian startups had a really cold winter in 2016 as funding dried up. 

It wasn’t different for “yet to be profitable” InMobi which had an operating loss of $40MM in 2015, more than 7 years after its first round.

InMobi was caught without clothes in the winter as their last round of funding was already 5 years back. Their main investor has written off the $200MM cheque and there was no new investor in sight.

To make things worse was a growing number of senior and middle level exits. 

This to some extent could be related to the choices that were made in the past. InMobi too, had to choose between the hard decisions of balancing culture and meeting short term targets in the last few years of hyper growth.

The choice of hyper growth had resulted in a sacrifice of culture, as the company would realize. Things were not great. But, that’s when winners bounce back.

Naveen and team made a turnaround plan. They started focussing on things that were working, cutting down on business or markets that were not adding value and bringing down a change in culture.

This culture revamp would not only end up making InMobi a better organization, but something bigger. It would become a breeding ground for startup founders to build massive organizations.

The InMobi mafia would be born, which would be an underrated and underappreciated outcome of InMobi’s cultural overhaul.

Things started improving and by April, 2017 InMobi was profitable. 

As it began to grow again, 2018 would be a year of re-prioritization, re-structuring, and re-vitalisation. 

Having grown consistently through organic and inorganic avenues for the past decade or so, InMobi would decide to establish a holding company structure with three distinct entities to allow for focus, strategic prioritisation and value creation.

InMobi would reorganize itself into three divisions to envision its future.

Playing a Skillful Glance

All of InMobi’s divisions would reinforce its vision to become the ad platform for mobile.

The largest of the three prongs, InMobi UMC, would be the flagship advertising technology business that we have discussed for the majority of this piece. UMC would, at the time of the restructure, account for around 90% of InMobi’s business.

The second arm would be an enterprise SaaS solution, TruFactor, a relatively new unit that InMobi would put $100MM behind in early 2019. TruFactor would offer InMobi a predictable and attractive revenue opportunity in a world that is primed for an explosion worldwide with the onset of 5G.

Finally, the third prong would be Glance, InMobi’s consumer product that would aim to be the gatekeeper to the modern Indian internet user. Glance catches the end-user at the first point of contact that they have with their phone, the lock screen.

Through partnerships with phone manufacturers, Glance would come pre-installed on 65% of all new smartphones in 2018, a total of 90MM units.

Through viral yet personalised high-quality content, Glance would be able to not only capture a phone owner’s attention - it would also hold it. By April 2019, Glance would boast 26MM DAUs and an average of 22 minutes spent on the platform daily

Displaying the power of hockey-stick growth in consumer products, Glance would double their DAUs by September 2019 and raise $45MM of external funding to build out their products beyond India in addition to investing in product development and monetisation efforts.

In late-2019, Glance would acquire short-video platform Roposo to gain access to high quality local content creators and acquire over 40MM users in the process.  

InMobi’s restructure proves that focus at scale is a viable path for growth, especially when a company offers multiple different products/services. 

While the new businesses — data and consumer content — are related to the flagship business, they differ in terms of the market segments they are going after, the stage they are in, and the kind of strategy, investment and execution that they need.

Coming into this year, InMobi would be riding on tailwinds in growth across their three verticals. 2020 would bring a global pandemic, a blanket ban on Chinese apps in India, and continued focus on India’s telecom sector with Jio’s mega fundraising spree.

UMC and TruFactor are uniquely positioned as the enterprise ecosystem to facilitate and drive increased mobile/video ad spending around the world. But perhaps the greatest tailwinds in 2020 have come for Glance - which saw exponential increases in their user base and engagement levels. 

In early May, Glance would break 100MM DAUs, faster than any other internet service in history.

After a few rough years, InMobi’s Asia focus, especially in China, gives it a unique position versus the advertising behemoths. Through Glance, it now has a platform that gives it access to a new audience, inaccessible to western players.

With a finger in the world’s two largest markets, its comparatively smaller size could be enabled by imminent growth. Having built a culture to foster innovation and entrepreneurship, its alumni provide terrific insights into the market.

As it looks to challenge the dominant tech forces globally, InMobi could be Asia’s advertising dark horse.

Written by: Abhinay, Aviral, Raj, Raghav

Audio Version: Behind the Scenes with AJVC

As usual, we have done a behind the scenes format with the writers and host Mazin

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