InMobi acquired the coveted title of India’s First Unicorn when it earned a $1 billion valuation and was strategically positioned to challenge the status quo of Google and Facebook in the mobile ad space. Despite the doubts and questions around InMobi’s profitability and success over the years, it turned full circle (yet again) this year when it made it to CNBC’s Disruptor 50 List for pathbreaking innovations that have elevated the mobile advertising and marketing industries to the next level. In more than a decade of its existence, InMobi has experienced several highs and lows. Let’s take a brief look at their entrepreneurial journey through it all.
Brand: InMobi (Originally MKhoj)
Business: World’s largest independent mobile advertising network
Founder/CEO: Naveen Tewari
Co-Founders: Abhay Singhal, Amit Gupta, and Mohit Saxena
“One has to figure out ways of competing by doing things differently. If we do exactly what others are doing, it would not work.”
– Naveen Tewari
- How InMobi Grew to Be a Disruptive Company
- Early Days
- Launching the Idea with mKhoj
- Pivot to InMobi
- The Business Model
- Desperate Times Led to Desperate Measures
- From Testing Methodologies to Actual Growth
- Finding Newer Markets, a Boon
- Finding Suitable and Scalable Talent
- Funding – Round 2
- How InMobi grew Beyond Expectations
- How It Spread across UK First, US Later
- What Made It Successful in UK
- How InMobi Used Traditional Marketing And Grew
- Breaking Boundaries with Geographical Expansions
- Recognition, Series C Funding & Rebranding
- How InMobi Matured And Found New Frontiers
- InMobi’s Marketing And Growth Strategy
- Early Milestones
- The Interlude
- Summary of Growth
- Distribution of Traffic
- The InMobi Culture
- InMobi’s Approach to Disruption
How InMobi Grew to Be a Disruptive Company
InMobi provides unique global advertising solutions and mobile e-payments to publishers, advertisers, and developers in the US, UK, Australia, Taiwan, France, Italy, Russia, Germany, and China (to name a few) making it the world’s largest independent mobile advertising network. InMobi received three major rounds of funding which changed the course of its growth. The first one was an $8 million funding from Kleiner Perkins Caufield and Byers (KPCB), a renowned global venture capital firm. The other two were from Softbank of $5 million and a whopping $200 million on two different occasions.
The founder and CEO of the mobile ad network, Naveen Tewari was fascinated with the rapidly changing mobile internet era. He started to tinker with the idea of VOIP which was among their first few projects and a chat application as well. Realizing that it was ahead of its times, Naveen and his team figured out a way to build a fundamental service.
Thus in 2007 MKhoj was founded. But, it was later rebranded to InMobi to suit its international audience. In 2011, InMobi was launched in China in 2011 and despite entering a lot later, it is one of the largest mobile ad networks in China. The company had to pivot to zero in on a vision that was viable and promising and has received resounding success across the globe.
The appended timeline outlines the journey in greater detail.
Naveen was born and raised in a family of IITians. His grandmother was a mathematician and also the first woman professor in IIT across India. His father was the Dean and a professor at IIT while his uncles were IIT professors. It was fairly clear that he too would graduate from IIT when the time came. His fate was sealed. So after securing his degree from IIT Kanpur, Naveen decided to work at Mckinsey instead of studying further. Here is where a lot of his early learning on the job took place and it also helped establish his work ethic. After this stint, Naveen went on to pursue an MBA from Harvard. During this, he worked briefly with Charles River Ventures in Boston. After graduating, Naveen stayed on in the Silicon Valley for a year and worked on some ideas with his colleagues which didn’t pan out too well and eventually failed.
Launching the Idea with mKhoj
While on a vacation in India, Naveen decided to pursue an idea he had around an SMS-based mobile search engine. He reached out to his friends Abhay, Amit, and Mohit (also IITians) to discuss the idea and build on it. The team of four founded mKhoj and set out to raise fund armed with a…presentation. Even after multiple rejections, the resilient quartet stood their ground and went on to secure an initial funding of $500,000 from the Mumbai Angels.
mKhoj began with a vision to solve the problem of local information using SMS-based monetization as a revenue model which was then slated to evolve into an SMS ad network. The idea at the time of launch appeared profitable but at the conception stage the model did not hold up. Here is why –
- The team had failed to clearly understand the cultural aspect of India, where every individual on the road is a source of high quality and mostly user-friendly information. Thus the demand was not very high.
- When people would ask for a pull notification, mKhoj (after partnering with content companies) would serve both content and ads together. The mix of content + SMS didn’t work and the CPM (Cost per Mille or Cost per thousand impressions) dropped down from $10 to $3 and further from $3 to $1. In short, they were making only Rs. 2 to 3 on Rs. 50 deal. On breaking it down further the CTA (Call to Action) was also weak. To make it work, they had to model their communication like those in call centers which was not feasible.
- Barclays India gave the startup Rs.10 lakh with a mandate to spend Rs.8 lakh on the SMS part of the campaign and Rs. 2 lakh for mobile advertising. Even though they had more than sufficient funds (Rs. 8 lakh) for SMS-led advertising, they could only spend Rs. 8,000 in a month. That sealed the fate of the model as a failure and the idea as flawed.
It was evident that they needed to evolve and come up with a better scalable model fast. That’s when they decided to move away from an SMS-based search platform to mobile advertising.
Pivot to InMobi
The decision to pivot was a turning point in the life of mKhoj and its founders. Leaving the existing business of SMS and focusing on the mobile web ecosystem, which had lately started showing signs of a strong future was a tough decision to make. mKhoj was re-branded as InMobi and things started looking up, slowly but surely. After a year had passed, the business was in a very bad state. The founders dipped into their personal savings, maxed out their credit cards and also stopped taking salaries just to stay afloat.
The Business Model
InMobi can be viewed from two perspectives – from the Publishers point of view and the Advertiser’s point of view.
The Publishers provide a platform to show ads for properties like Apps, Games and Blogs and the Advertisers who want to reach out to users, want to create awareness about their Apps, Games, and Blogs. As a Publisher, you can discover the advertisers for your property yourself but you have to consider the complexity of devices, geographics, operators etc. or you can associate with InMobi which works as an arbitrator between the Publisher and the Advertiser and takes some share away from you as revenue.
Advertisers too can go out and hunt for Publishers who would be willing to take their money and show their ads. Do keep in mind the complexity of targeted devices, demographics, geographic limitations and operators etc. The Publishers can track and report it back to the Advertisers or they can choose to tie up with InMobi to handle it for them.
Publishers can also be Advertisers as they also want to drive users to their properties. With InMobi, Publishers can be stress-free because InMobi’s ad network automatically figures out the best possible ad with the highest possibility of getting clicked and converted and as an Advertiser be assured that the ad will reach the right audience.
Solving this pain point for Publishers and Advertisers is the USP of InMobi and they command a certain revenue cut.
Desperate Times Led to Desperate Measures
In 2008, a team led by Mohit rewrote the original code he had built for the text-based business model to a mobile advertising one in about 45 days. In this timeframe, money was reduced to a trickle. They met with venture capitalists (VC) and private equity (PE) players to convince them of their immense growth and potential success and out of 21 prospective investors, absolutely no one was interested.
The team decided to work without pay and also pitched in with their credit cards. The cards were used to run the company. Team members refrained from making personal purchases using their credit cards because credit limits were getting breached rather quickly. It was these tough periods that really brought the team close and showed great commitment.
By February 2008, they had only $2,000 in the bank and less than a week before the startup would have to shut down. Putting everything on the line, Naveen decided to travel to San Francisco, to give it one last try.
In San Francisco, Naveen began cold calling and fortunately enough he landed a meeting with Kleiner Perkins Caufield & Byers (KPCB) and Ram Shriram who heads the VC company Sherpalo Ventures. The meeting ended in 40 minutes flat but both the firms jointly invested $7.1 million in Series A funding in InMobi.
From Testing Methodologies to Actual Growth
In the transition phase, InMobi put up a small team to test things out. Mobile advertising was picking up the pace in the market and to back it up the Sales team was pointing them towards mobile advertising. To put the final seal of approval on the idea, some competition was spotted in the same field.
The transition phase is very exhilarating as a lot of reshaping and reconstructing goes on. Advertisers were looking out for more focused CTA and more information on the user to get better results and to run better ads. 20% of the money given by the Advertisers was spent on mobile-based advertising which was giving them 5 to 10 times better results.
Publishers are crucial to their business model and they have niche sites that offer certain services. After a certain time, they became friends with the Publishers. Plus, they figured out other ways to monetize for the advertisers. The mobile engagement was picking up and they were forming a mobile advertising ecosystem and making money in the process. They had a whopping 15,000 customers at that point and opened up in Inorbit Mall, Mumbai.
Finding Newer Markets, a Boon
Expansion and growth are the two main aspects of any business. If you don’t grow in business, you die. InMobi was also forced to find new markets for themselves. They had to choose which countries to target. That’s where they used phones as a glorified voice mail service. Naveen learned this when he was in the US, studied the ecosystem, gained a lot of experience and also learned from his friends.
Expanding to Southeast Asia was one of the most profitable ideas as they signed an exclusive deal with social media site hi5 in February 2010, specializing in games and virtual goods, to serve ads for its mobile site in Thailand. Hi5 is huge in Thailand because they get an overall 50 million monthly visitors worldwide. InMobi says it now receives 5 billion ad requests a month from Asia, a growth of 400 percent in the past six months. There are other Indian startups who saw similar growth. Chumbak grew at a rate of 300% YoY in India.
Again SE Asia turned out to be a boon for InMobi because it was one the fastest-growing advertising platforms in Asia, with two-thirds of the region’s consumers comfortable with mobile advertising, while 54 percent is ready to receive personalized advertisements. This made the business model viable in the market and InMobi boomed.
According to Naveen, “India and the emerging markets are hubs of opportunity and potential. The usage is just booming making it the right time for entrepreneurs”. When asked about the secret behind the success, he said “It is mandatory to completely understand the usage patterns and trends. That was what we did and realized that mobile ecosystem was the on the verge of a mighty explosion and we wanted to be a part of it. Once we had the idea in place, we needed a business model and that sealed the deal for us. We used the reverse market strategy where the emerging markets formed the development and test base for the Product and then it enters the global markets.” While the internet user base in the US gave Silicon Valley its platform for success, the emerging markets have a mobile user base to provide fuel for progress.
Finding Suitable and Scalable Talent
Finding the right people is not arduous when you have the right technology. That’s exactly what InMobi had to offer. A strong technology with a sturdy business model reaffirms their technology strength. On top of that, they reached out to enthusiastic bloggers to promote their services. Fixed meetings via cold calling, asking for referrals. Local representatives who were enthusiastic about mobile, capable and with a grasp of the local market were hired immediately. With a global mindset to grow and an explosive market in mobile advertising, InMobi grew in South Africa as well.
Funding – Round 2
With this new round of funding, InMobi focused on its US expansion where the company got sluggish impressions. InMobi also launched in Japan and continued its existing operations in Asia Pacific, Europe, & Africa. The company also doubled its engineering staff to further enhance its mobile advertising technology platform globally.
How InMobi grew Beyond Expectations
InMobi succeeded because they got the following right –
- Product: Chose the right product just before the smartphone market exploded and they focused on building highly scalable mobile technology. Both the Publishers and Advertisers reap maximum benefits from InMobi. Ads are delivered in 20 milliseconds to the publishers and the advertisers get the best analytics package in the industry.
- Capital Efficient: InMobi focused on the market where the consumer media “mindshare” for the phone was the reverse market strategy and attracted the top global engineering talents. Additionally, total funding of $15.6 million from KPCB and Sherpalo ventures helped them scale faster.
- Regional Talent: Hiring phenomenal local talent helped them enter into the EU in August 2009, the US in June 2010 and a soft launch in Japan in the same year.
How It Spread across UK First, US Later
In the period of 2010-2012, the smartphone revolution was still in progress. Giants like Samsung were pioneers in adopting Android and were making huge waves in the smartphone market. While the US was still adopting, UK already had their revolution and smartphones were booming. InMobi collected the data and thoroughly scrutinized it. After collecting all the information and based on gut instinct, Naveen decided to expand in the UK.
What Made It Successful in UK
As mentioned earlier, InMobi succeeded because they hired local talent. They applied the same trick from their playbook in the UK too. The founding team would land there and figure everything out from scratch. The team would conduct events, dig down on LinkedIn, do cold calling and reach out to bloggers to establish the foundation. Once that is done, people start pitching why they would be a good fit for the company. They would hire the skilled local talent.
How InMobi Used Traditional Marketing And Grew
InMobi used a lot of conventional marketing in order to grow. They followed these old tricks from the book:
InMobi launched MIIP for China and Naveen delivered a speech in Chinese. These events would help convince a lot of these advertisers to come on board. And the effect of it would lead to PR. TV, Newspaper coverage.
In May 2011, InMobi entered in a partnership with Amobee which offers complete, end-to-end mobile advertising solutions and services for advertisers, developers, publishers, and operators. They announced a 3-year, multi-million dollar partnership. The scale of the partnership was remarkable and was a clear sign of the massive growth.
In a single year, InMobi acquired 3 companies. In August 2011, InMobi acquired Sprout, an HTML5 rich media platform and renamed it InMobi Studio. July of 2012, they acquired Appbistro made by MMTG labs and AppGalleries. In July 2012, InMobi announced the acquisition of UK-Based firm 31 Metaflow Solutions.
In June 2010, When Google and Apple were busy in an ugly turf war, InMobi announced a $2 million world developer fund to encourage application developers to use InMobi for in-app advertising. In March 2011, they gave a stout proof that Android was winning in terms of Mobile ad impressions. This news by InMobi solidified their growth.
5. Socio-Branding Marketing campaigns
When InMobi grew and was in a position to do some CSR, it did its bit. InMobi handled the social responsibility of helping people all around the world really well. Hurricane Sandy victims received help from InMobi’s mobile ad campaign and also helped the American Red Cross raise donations.
Breaking Boundaries with Geographical Expansions
1. Expansion In India
InMobi already had its hold in the Indian market but the expansion exploded between October 2010 and January 2011. The Indian mobile ad market grew by 27% in just 90 days and the mobile ad impressions increased to 7.3 billion. One specific reason behind this was the rise of the smartphone which outpaced advanced phones and represented 14% of the overall market.
2. Expansion In Europe
Aug 2009 – It is abundantly clear that InMobi was launched as mKhoj and later re-branded for the western countries to pronounce easily. At this point in time, InMobi was grossing over $1m in mobile ad revenues per month and was already in 23 countries. With a changed and reinvigorating business model in association with hiring the best local talent, InMobi expanded in Europe.
In January 2010, InMobi hired a Strategic Partnerships for Europe, Middle-East, and Africa named Rob James. He was an ex-Google employee and led InMobi’s the operations in the European sector. At this point in time, InMobi was used in 37 countries across the globe with over 7.5 billion ad requests monthly. In Europe alone, InMobi is now receiving 850 million mobile advertising requests.
In December 2010, the European mobile ad market grew exponentially by 88% in just 90 days. This was possible because of the raging Android OS with monthly 256 million ad impressions and iPhone OS impressions (+260 million) across the continent. iPhone OS dominated the European mobile ad market with 31.9% while Nokia slid to second place with a 19.7% share and Android slowly gained traction with a 9.7% share in the market.
3. Expansion In USA
In December 2009, InMobi had just begun their operations in Europe and they were witnessing decent profits with 850 million impressions and $1.6 million in monthly revenues. But, they were eyeing the US market for additional expansion and they launched in the US. Out of InMobi’s 16.9 billion mobile ad impressions globally, US only had 2 billion. InMobi had a slow start in the US but in a matter of a year, their ad impressions grew from 2 million to million.
4. Expansion In China
In the next phase of expansion, InMobi targeted China. Taiwan’s mobile space was growing at a rapid pace. In order to establish the on-ground presence, InMobi focused on hiring the best local talent with an in-depth knowledge of the Taiwanese mobile landscape and consumer preference. InMobi served 1 billion ad impressions in 2011 which was 15 times of ad impressions in 2010. InMobi has already supported Taiwanese campaigns for brands like Estee Lauder, Godgame, Taiwan Mobile and China Airlines, through local partners and this move will help strengthen both direct advertiser and agency relationships going forward.
Creating New Products
In business, diversification is as important as breathing. InMobi was well aware of this and they would microscopically scout the market and the customers to understand their demands. InMobi is also very quick on their feet as they would change their tech stack every quarter and if somebody thinks of an idea they were allowed to pitch it to the management. If the idea is feasible, they would put a team around it. They conducted hackathons to find talent and ideas.
InMobi launched the InMobi Ad Tracker in May 2012. This tracker provides real-time analytics which allows advertisers to measure multiple conversions on mobile web and app campaigns, across all advertising networks and publishers. The InMobi AdTracker platform is separate from the InMobi ad network.
The product creation didn’t stop there. On 27th November 2012, InMobi announced their Lifetime Value Platform (LVP) for tracking metrics and for targeted messaging based on the user for publishers & app developers. LVP will help developers divide their audience into different segments and customize the experience accordingly. In InMobi’s words, it’s going to be “democratizing the understanding of user behavior.
Recognition, Series C Funding & Rebranding
In January 2011, Naveen was named one of the 50 Most Influential Executives in Mobile Content. He was featured in an annual power list, based on an industry poll that includes business heads from global giants such as Apple, Facebook, Twitter, Amazon, and Google among others.
In September 2011, InMobi received the biggest funding of their lifetime. Japan’s SoftBank Corp invested $200 million in the company. The funding took place in two tranches – $100 million in September 2011 followed by an equivalent tranche in April 2012. SoftBank joined KPCB and Sherpalo Ventures who are already invested in InMobi to help them become the global leader in the mobile advertising industry. Naveen commented: “The size of the investment and quality of investor validate the enormous potential in mobile today and strengthen our role in helping the industry evolve.”
In February 2012, InMobi rebranded itself once again to express their true global nature. This shows that the brand has evolved and it represents the energy and impact of the InMobi mobile ad network.
How InMobi Matured And Found New Frontiers
China gave an edge to InMobi. With 30% income from China, InMobi saw 15 fold growth in three years and a 140% compound annual growth rate during 2012-2015. A total number of 460 million smartphones were covered by InMobi. In 2017, InMobi invested $15 million (Rs.100 Crore) in China and expanded in the fastest-growing market.
InMobi’s Marketing And Growth Strategy
In December 2013, InMobi partnered with CocoaChina owned by mobile game publisher Chukong Technologies. The partnership was aimed to aid developers as they approach the Chinese market while aiding CocoaChina to increase its global footprint in the West. InMobi was then focused on publishers and large developers. With this partnership, InMobi focused on gaming platforms. From September 2012 to September 2013, China’s ad impressions blew up and witnessed an 84% increase. For the same period, in-app advertising also grew by 86%.
In May 2014, InMobi launched InMobi Exchange the largest mobile-first programmatic marketplace for buyers and sellers globally. Rubicon project backed this launch with infrastructure and a base of buyers. InMobi supported with mobile expertise and created the exchange.
In July 2015, InMobi partnered with Samsung to embed hardware into the phone that displays ads on the user’s screen. The motive behind this partnership was to integrate a sophisticated piece of hardware on the phone which will be able to figure out a customer’s mood and give them contextual ads. With this partnership, InMobi aimed to reach 650 Million Smartphone users.
In September 2015, InMobi formed a partnership with a leading global content discovery platform called Taboola, recommending personalized content recommendations to iOS and Android users. After the partnership, Taboola’s technology was integrated into a number of verticals like information, news, sports, gaming, and entertainment across 700 native mobile apps. Both the companies hoped to engage 1 billion customers.
Events, Funds, and Acquisitions
Other than partnerships, InMobi grew in several ways.
- InMobi conducted events like InDecode, helping developers decode the business of apps.
- Organised hackathons to bring in the crowd and hire skilled people.
- Created funds which are a global expansion technique. InMobi created a $25 Million Fund for Indie game developers.
- Organise meet-ups.
- InMobi acquired Overlay Media in January 2013. Changing the team structure, questioning everything every 6-8 months and becoming more region specific.
Demonstrated An Innovative Culture With New Product Launches
From March 2013 to August 2015, InMobi continuously launched a series of products in the market. In March 2013, taking advantage of the massive fragmentation that existed on the Android platform, they launched App Publish, a distribution platform specifically for Android apps, which lets developers push their paid, free, and freemium apps to multiple Android app stores at once. In February 2014, they came up with an idea of taking advantage of gamers’ emotional states to produce high click-through rates on advertisements in their games. Along with tools, lifelike game experience and gameplay bonuses from ads increased the game ad clicks by 275%.
In 2014, they launched two major products, InMobi Exchange, and Native Ads Platform. InMobi Exchange was in partnership with Rubicon Project, it was a mobile programmatic buying and selling platform and the world’s first exchange to support buying mobile native ads at an unprecedented global scale. Native ads platform allows mobile publishers and app developers to deliver in-context, engaging and native ad experience to end users with minimal development effort.
In December 2016, the launch of the 1st mobile-first in-app remarketing platform, the mobile video ad consumption soared 200% and the mobile remarketing soared 400%.
The recognition InMobi received year after year was encouraging.
- In 2013, InMobi was identified as one of the 50 Disruptive Companies in the field of Internet and Digital Media by MIT in its review of the world’s most innovative technology companies.
- In 2014, InMobi reached an astounding 759 million active users per month through their mobile devices.
- They had the second largest reach in the world after Facebook in 165 countries.
- A few months later, they reached 1 billion active unique mobile devices and became one of the world’s largest mobile ad businesses that had not gone public.
Every startup has a near-death experience once in their lifetime and so did InMobi. In September 2015, a US-based consortium of lenders called Tennenbaum Capital Partners lent a fresh debt of $100 million to InMobi. Out of $100 million, $40 million was used to pay the debt to Hercules Technology Growth Capital. InMobi’s revenue in March 2016 was about $320-$325 million and at the end of March, they had cash equivalents of about $30 million. This cash was not enough to last a year without fresh funds.
Laying off 10% employees in April 2016 was one of the hardest blows for InMobi. It was a sign of the mobile advertising network’s struggle to survive cut-throat competition from the likes of Google and Facebook. They (InMobi) had high hopes for their products, but they were not meeting their revenue targets and the burn rates were not coming down.
Around the same time that year, Federal Trade Commission (FTC) filed a case against InMobi charging them for deceptively tracking the locations of hundreds of millions of consumers – including children – without their knowledge or consent to serve them geo-targeted advertising. They had to pay $950,000 in penalties.
Summary of Growth
|STAGES OF GROWTH||MARKETING|
|Launching the idea||
|Idea → Demand validation||
|Growth → Expansion||
|Expansion → Maturity||
Distribution of Traffic
SimilarWeb, a data collection tool was used to gather statistics related to online visitors.
Over 50% of their traffic is direct which means a lot of repeat users. Their next biggest traffic driver is Search which means they’re creating content optimized for search. The rest is mail and social. In Social, the leading sources are Facebook, LinkedIn, Youtube and Whatsapp.
The InMobi Culture
According to Naveen, where entrepreneurs falter or go wrong is when they do little to help the truly passionate people grow. He says that as an entrepreneur you forget about the people and how you can help them grow, especially who really took the risk with you. Naveen and the team realized that they were doing something wrong and they came up with this steps to make the work environment a little friendly.
- They decided that the employees don’t need their supervisor’s approval for up to six days of leave.
- If a recruit quits within a month they get 3 months’ salary.
- InMobi would spend $800 on every recruit towards their learning.
- Gave $200 every year to change their phones.
- Employees who want to quit and start on their own, can use the office space, brainstorm with ex-colleagues and eat the free food.
- In order to gain the trust of the employees, the company would never ask for expense reports, traveling, handbook etc.
- Employees can move from department to department if they wish. 15% of InMobians have moved to a new department within the company
- 6 months of paid maternity leave. 3 months more than the statutory min.
InMobi’s Approach to Disruption
The approach adopted by InMobi breaks its thinking into three buckets.
- Revenue Generation: This bucket is made up of 60% efforts directs towards revenue generation and 30% towards mindshare (developing consumer awareness/popularity)
- Strategic Bets: This category contributes 30% to revenue and 60% to mindshare. Naveen confirmed that a lot of executive time is invested in this bucket. InMobi’s discovery platform Miip in this bucket.
- InMobi’s moon shots: The remaining 10% from each of the aforementioned buckets go into this category. Every idea that starts off as a moon shot is born with a small team of thinkers exploring the feasibility of each idea followed by Naveen gauging the possibility of moving these ideas to the next level of mindshare investment. This is done with a parallel focus of aligning the moon shots to a larger strategy, goal, and vision.
Considering they have been through a lot to get to where they are, I asked them – What does it take to build a successful startup?
Amit – “Every startup has their own complication and will face a hard time solving it. You need perseverance and a reliable team to solve the complications.”
Naveen – “Luck.”