Dailyhunt’s Journey – Part 2

Welcome back to part 2 of the Dailyhunt episode, with Virendra Gupta (Founder, Dailyhunt) and Umang Bedi (Co- Founder, Dailyhunt), as well as, Vikram Vaidyanathan (Director, Matrix Partners India). We talk about the dynamics of their partnership and also the cover the changing face of content consumption in India, and how Dailyhunt has been at the forefront in each of these changes. Tune in.

Salonie:

Hi and welcome to Matrix Moments, this is Salonie and in today's episode, we aim to uncover the journey of building Dailyhunt, India’s leading, content, and news aggregator platform. Their also pioneers in local language content and distribution space. Joining us in this discussion are the founders of Dailyhunt, Virendra Gupta, and Umang Bedi, as well as, Vikram Vaidyanathan, Managing Director at Matrix Partners India. Viru and Umang’s successful partnership as co-founders is a well-known and a well-celebrated fact. We talk about the dynamics of their partnership and also the cover the changing phase of content consumption in India, and how Dailyhunt has been in the forefront in each of these changes, key milestone, and strategies that shape their journey as well as the longterm vision for the company, we cover all of this on more in this episode. Tune-in to part 2.

Vikram:

You anyway, segwayed into where I wanted to go, which is the building for Bharat and the entire pivot on the business. I wouldn't call it actually Pivot, it was actually building on a foundation and let me start on the monetization part first, because people say you can't build for Bharat, paise he nahin hain, and you can’t do adsales, adsales can only be done by Facebook and Google and they can probe most of the market, but you guys did both. So, talk about those early days on just forming this ad sales engine, which, you can share whatever the numbers that you want to share. But I would say probably one of the most successful monetization efforts that we've seen across this sort of ecosystem.

Umang:

So actually starts with the heart, which is the product. And monetization comes a little later, but we did six key things on the product, around this new mission of being the largest platform for Bharat, enabling Indians to discover, consume and socialize with content that's not just informational, but engaging and entertaining. So, the first thing that we did is we exploded supply of content, we used to get content from 800 publishers, largely news. We exploded with 50,000 plus publishers across various categories who were giving us news entertainment, lifestyle, divinity, astrology, Bollywood, crickets on and so forth. The second part was changing the feed architecture, earlier we looked like a smaller deck of slim cards just to photograph in a headline and attribution to the publisher. But we moved on to being a true multimedia focused autoplay video, In-Feed very Instagram or Facebook inspired feed architecture with lots of content, which we had got from Bharat, the third was driving that discoverability, Because one, when you're ingesting 2 million pieces of content every day, how do you serve what you need to serve to whom? And I would say that the team that Viru had put together and we supplemented it along the journey just built one of the most amazing algo's where we ingested 2 million pieces of content everyday, built the deepest deep learning models to understand that content across 1600hour, plus hierarchies with more than thousands and thousands of tags for language to understand. And on the other side was understanding user behavior, but true engagement, not just click-through rates, but measuring more than 10 billion interactions a day, of how people consume, how they scroll, how they spend time, their likes, dislikes, shares, over 70 plus AIML, for local language content of building over 1.4 million vectors of what, who likes to consume, what, by what time of day and what source from what publisher in what format right, across this large base. Right. and then the AI does the science of really constructing the feed, taking the latest content from the left-hand side, and marrying it to where users, content graph signals. That was the foundation that was built.

Vikram:

Yeah. So, I'm just going to touch on a couple of things and maybe explain this in more layman language. And we've all experienced these acts, right? Where if you get the first two pieces of content and slides, right, then you have my attention and I would have been doing 10, 15, 20 minutes of content, but if you move me in on slide one, that's it I'm out because that's the attention span. And I think the tech that Umang, laid out beautifully does exactly that, but it does this for somebody in Haridwar, who wants to actually figure out what had happening in UP, in Hindi while doing the same thing for somebody in Madurai, in Tamil, who might be actually interested in not in politics, or then all their cooking and do that across these multiple languages, multiple geographies, ingesting content.

Virendra:

So I thinkbuilding on what Umang and you said, I think, in the local language of a machine learning today, I think we can comfortably say that we are the best company in the world, or understanding content and user behavior and recommending content to the user. And it has evolved over a period of time and with so much data and which was available to us over a period off last four or five years, and with the new vision, which we enabled on two years back in terms of making a multimedia feed with video viral cards, content, and the explosion of supply of content, which is not getting supplemented with the launch of social. I think the engine is now well oil to serve every India, the content, which he, or she wants.

Umang:

And I think what Viru did there, if I remember correctly, the team actually built something known as a recommendation engine that on the fly in a non-linear fashion, updates the feed dynamic in real-time basis consumption, which basically means Vikram, that if you're consuming a certain source of content over time, guessing you engage on it automatically in real-time, we dynamically update the feed with either content around the same genre or from a different genre that you like to consume at that time of day. And, the engagement rate on that when two to three times of the average engagement rate, which was 20% of the content on feed really exploded to more than 50%, I think a whole bunch of these tech innovations led the foundation for user group. And what we get in that 18 months is grow from 40 million MAU, 20 million on the app. 20 million on web go about to 70 million MAU, exit this March, more than half of which about 140 million was on the app alone. But we grew our DAU’s which was traditionally around 8-10 million on the app, 70 odd million on the app, right? So the BAU to MAU ratio from in the twenties to the forty-fives. 45% and the time spent, which was around 18-20 minutes a day, to now 30 minutes a day. And so when you taken all these effects, you are growing the user base, you're growing the time span, you're growing the engagement, you're growing the retention, and you're doing it off a massively growing base, which you're adding about 5 to 10 million MAU every month, that happens with deep deck, right. And then comes the easier part or the harder part, whichever sense you refer to it of monetization. So I think those foundations were very, very critical to build an ads business. Without that, I don't think we would have an ads business worth talking about.

Vikram:

And I remember, you use to keep talking about this tipping point. And he used to say, if I get 150 million mous, then I know I can get through this. I can do 200. If its 200, then I can get to this to 250 if its 250, and I can get to this, explain that intuitive max that you have.

Umang:

So, If you look at the, if you look at India, we have 1.3 billion people, right? But when you look at the consuming class of India, which is SEC, A-B urban-rural, we have roughly about 450 million or 400 million consumers, within that 1.3 billion,they are found within three India's, they're found in what we call the Australia of India, or the UK of India, which is the top eight metros, hundred million people. who demonstrate behaviors like anyone in the West then is what I would refer to as the middle belly or the Brazil of India, which is another 400 million people living in urban centers. But in tier two, tier three-tier four towns. And then there are 800 million people in urban, in rural India right. now that 400 million consuming glass, which is a government of India, the definition of socioeconomic kind of population is found in all three tiers. It's more concentrated in tier one. However, the bulk of them is present in the Middle belly and then there is a long tail of those SCC A-B also in the underbelly, right? Or the long tail within. The ability, if you can cross in our head, 250 million app MOU's, right. You get to serving about two parts of that base. And then you get into the vicinity of the big boys, right? Who are already in that number, if you think about how many platforms in the world, I'll go out a hundred million dollars, they're probably 8 or 10 of them. If you think about how many, a hundred million-dollar platforms in India, there are two, right. And we suddenly are getting into that list by the end of this year, getting to a hundred million dollars. So I think the whole value proposition to the ecosystem of what we were creating was a nice flywheel. We are going to get very high-quality content. Nothing racy, raunchy, family-oriented content. We're going to get it from the widest and deepest set of publishers across Bharat. We are going to share revenue and monetization with them on day one. And as we get a more educated user base, because even though we unleashed video, it's about 30% of the time spent 70% was still on text. And so you have to be educated, to get them onto the app. You need to know how to read and write. And so, as you're getting more monetized audience, you're adding value to the user by getting him the latest content. You're adding value to advertise to get them access to this. You're sharing that value with the publisher and you're creating this very nice flywheel, right? And so the way we look at it is we want to serve all 450 million SCC A-B urban-rural in the next two years. Right? And I think end of this year, we get to 200 million maul’s, 550 million total mauls including web and a hundred million app duos alone, right. And so another year from there, we kind of getting to this entire base. And so that's how we look at the growth because advertisers want to reach people who can pay, they don't want to reach SEC C-D, which unfortunately are not consuming classes or consuming Indians.

Vikram:

That's a truly exciting story. And I'm looking forward to the next few years of watching the story. Viru, I don't know if you wanted to add something.

Virendra:

So on that point about tipping point, I think one thing which I learned over this last few years was, the large scale money movement the advertisers look at reach and frequency, correct. And that's the basis of you when you reach a certain amount of DAUsand MAUsand when your DAUsby MAUsis higher, you started getting disproportionate volume wallets advertisers, that's one. The second thing is as you move beyond brand to performance advertising, you need a large user base who serve many kinds of products and ads to the user base so that you can sample and build a good performance. And I think what Umang told very nicely was it was this, it was a logical step of investing in the product building blocks, scaling the user base through longterm partnerships with less money in the pocket, but taking big bets right, and subsequently building a great ad tech platform and great GTM, which could then start taking the juice out of the engagement of these large users. And I would just add few more lines.

Vikram:

So guys talk a little bit about the overall vision for Dailyhunt and especially since, we have so many tailwinds, headwinds, everything happening at the same time. It's an exciting time to be part of the ecosystem, in that context talk about your vision.

Umang:

So maybe I'll start, I'll just say that Dailyhunt at the heart stands for Bharat, we are made in India for India by Indians and in 14 different Indian languages, right? So there is no one more true to the spirit of serving Bharat, which has truly been the embodiment of the platform that Viru founded, right. And when I take a step further, the internet is getting really exciting. There are lots of tailwinds around growth, 900 to 10 new internet users coming online. Our local language users, every day local language users are actually spending more time per week. Our time per day in terms of consuming mobile content, whether it's entertainment, whether it's short-form video, whether it is reading news, whether it is collaborating on social platforms. At Dailyhunt the way we've always looked at our platform is built on the ingenuity of what we consider a world-class tech stack. If you were to benchmark us with any of the global giants, the way the architecture of the product has been built is with a supremely robust back end, which is powered by what we believe the world's most sophisticated AI and ML stack, catering to these 14 languages. And so we look at this tech stack as in machine, that's going to in a very modular fashion, help us create the playbook for our next growth. And the playbook for next growth is to win Bharat, serve them with a family of apps that are serving multiple use cases. And ultimately when the internet ecosystem space with also the regulatory tailwinds being in our favor. To that effect, what we have done is looked at the core of Dailyhunt and really said, like we told you earlier, how do we make this more social? How do we drive consumers to become curators, creators and converses of content? So really driving social effects around news infotainment and entertainment, right? And that has gone live and we're seeing some phenomenal early results of the ecosystem with more than 25% of the user base logging in, who's spending a 35% higher DAUto MAUratio and a 15 to 20% higher time spent. The second app that we have launched in that series is Josh. And Josh is again a made in India app off the Dailyhunt backing, which is a short form of video entertainment app. Short video is vertical in nature, less than 15 seconds, really empowering the creators of Bharat and the next 500 million consumers that are going to consume short video. The third piece that we are launching right now is a short sharing app for social sharing for Bharat again. So when you really think about it, it's building on the foundation of supremely solid tech stack. That's kind of becoming an app generation machine first for social on Dailyhunt, second for a wildly social short video sharing app Josh and third around pure social sharing, of viral cards, memes, entertainment, Bollywood kind of content which has come out right now. So that's the way we think about it. And as we go further, this is just the start, of that journey of churning out a family of apps, right. but we're going to strengthen that and solidify that key use cases that we see across Bharat.

Vikram:

Viru, anything to add?

Virendra:

Yeah. So look, I mean as we think about the business, right, I think one thing we have seen in this business is change is always constant, right? If you are a part of the Indian internet ecosystem, you will see there will be a lot of wins, which favor you, there will be a lot of wins that don't favor you. One thing, if you see what we have invested over a period of time is building capabilities and be ready for the chain as in when it happens. So, I mean the Dailyhunt, as Umang mentioned, move from version two to a version three, which is social app, because now we are going to drive a lot of conversations on this app. And that core app is generating a lot of cash and revenues. And that's a scalable business we have built, Now this machinery of tech and monetization, which we have built. Now we are extending it to multiple use cases, opportunistic use cases. And basically when the internet ecosystem war in India. We are in the process of launching multiple apps. Fewwe have launched few will come. We also doing seed investments in smart entrepreneurs opportunistically. And this opportunity has come because of things which have happened recently to kind of feed this ecosystem and become a large size consumer internet company for Bharat.

Vikram:

That's well put and very mature way of both articulating the vision and also capitalizing on the opportunity. I'll just add, I think when you think of a company's right to win, I do think that we have a tremendous right to win within this landscape because you've got the tech product, which personalizes pretty much better than anyone else across the India ecosystem. And at the global level, you've got access to content and content creators, and you build that access of painstakingly over a long period of time. And third, you have the monetization engine, which can fuel all this in a profitable manner versus just putting VC dollars to work. So capitalize on your right to win and good luck on this big launch.

Umang:

Thank you Vikram.

Virendra:

Thanks Vikram.

Vikram:

Fantastic,and you gave us a glimpse into the execution machine that you guys have built, how's that execution machine doing during COVID?

Umang:

So if the foundation is strong COVID or no COVID, I think if I just pause back, right, and I look at businesses around the world, the US post world war two or 1945, 1915, the US economy is hit every six years with an economic recession. And this is a fact, if you look back into history, I think we were lucky that for the last 12 years, since 2008, the US economy, wasn't hit and when I say the US economy, it's a global economy. We live in a globalized world, US, Right. Now, it is unfortunate that this pandemic has been the reason where people are dying which has caused this recession all over the world. Right. But this recession was to come. If you look into the history of 2008, there was 6,640, odd companies on NASDAQ that had a valuation of more than a billion dollars. You VC’s call it unicorn, but I've never seen a unicorn, right? So these are in the VC world, It's very fluffy on very different kinds of vanity metrics. Sorry, I'm taking a digVikram, we're just such good friends.

Vikram:

It's fine. I'm used to it.

Umang:

You're used to it haha. If you think about listed companies, their valuation is more real. They are on PEmultiples or revenue, market, right. About 500 of these companies in that period of 2008 to 2010, 500 on 6,640, so you do the math there, It's under 10%, actually grew valuation and grew business and grew IA. And so we look at COVID as that opportunity because in the next 18 months, companies or you will be able to tell the difference between the men and the boys. A lot of companies that were built on fluffy, high growth, high burn vanity metrics are not going to be around or are going to be severely impacted or going to have to make significant pivots in their business model, because it wasn't really a real business. Whereas our goal, which we are on the journey doing is growing user base, growing time span, growing engagement, and growing monetization a hundred percent, through COVID, such that at the end of this and sorry, growing profitability through this, right. But all of this has been built on the foundation of some core principles. So Viru talked about monetization on ad tech and go to market team. Our EdTech is built on the first principle of an online, real-time bidding platform, where we are maximizing revenue, aggregating sources of demand, reducing the network dependencies to less than 10% of revenue, because that's when you went in command of yourself, Viru talked about a performance engine. So we built what we now are seeing to be a world-class performance engine, where we are optimizing the ads by preference. So it's not really the highest bidder wins, but being able to serve the right ad to the right person who has a propensity for that kind of content, right. The third is really building targeting with zip code or pin code level targeting because we get traffic from 95% of the 21000 codes in India. The fourth is really around building trust and transparency with advertisers. So all our ads being vote than IAB certified, integrating with third party, mobile measurement partners like, but most importantly in a performance business, being able to get a full view of that user outside our platform. So we now have about 120 plus data integrations with performance advertisers, right? Where we are being able to track the life cycle or the journey to both mid-funnel and bottom of the funnel conversion metrics, right? And as a combination of that and a world class go to market team with leaders from Adobe, Microsoft, Yahoo, Facebook, YouTube, Google, we've been able to drive that revenue growth in that impact, I think the fact that we've been able to focus nearly a third of our business from small businesses who are really don't advertise on self serv platforms in tier one markets. The fact that we've been able to build a performance engine and attract a disproportionate amount of gaming EdTech, OTT, streaming, movies and handsets kind of advertising, when you build that nice mix where you're not dependent on anyone vertical or any one line of business for revenue, but you can you in on one of the leavers, depending upon the times that's, what's enabling this growth. So I think coming out of COVID, which may be 12 months from now, in the last 18 months, we've grown our revenues from 15 million, 20 million ARR to 125 million ARR in March. And that's been exponential growth in the last 18 months. We will continue to grow our user base from the 140 million mauls by the end of this year on the app site. Well, over 200 million, to 350, as I said, getting over the a hundred, but revenue growing to about 215 million ARR, nearly doubling. But at the same time, the important metric of profitability, we used to run it negative a hundred percent or negative one 50% EBITDA line about 18 months ago, that would come to a near breakeven, this year. And so building it on strong unit economics on strong profitable growth across user base revenue engagement and retention, I think is the key mantra, Viru should talk about the whole pivot that we made on social, which we've done through COVID, right? With entire team working at home, Viru I’d love for you to chimein there.

Vikram:

Viru, I'll take last few comments from you, and the social one is a big deal before we sign off.

Virendra:

Yeah. So, basically just before social, just want to comment a little bit on the COVID moments in the company, right. I think few things have happened in during COVID and it's an unfortunate incident in the world, but a lot of time you can't change the behavior of ecosystem, but I think things like COVID ended up changing the behavior of ecosystems. And let me tell you what it means, basically each employee broadly in the company is aware that money is important, cash is important. Typically startup world was operating on the fact that there's going to be a continuous flow of funding, and you could do whatever you could do. You could burn money in marketing, you could build, useless products. You could have fancy offices. You could go to great holidays on company's expense. I mean, we were never like that, but generally, the whole COVID experience has taught thegood old way of doing business, where as Umang pointed out, profitability matters. I think that's one thing, which is it just gone down well and then a marketing guy is spending money, he's thinking about ROI, when then technical guys architecting, he's thinking about the hardware is going to require, and he's optimizing the code and people are building features, they're removing nonsense and figuring out, Hey, I got to focus on what matters to customers and what will give me back. Everybody is doing rooftop consolidation and so on and so forth. So basically the good old way of even looking at costs in a realistic manner is coming from that's one thing, change of behavior and discipline. Me and Umang are very happy about how our teams have reacted to it. So I think that's one very positive thing. Second thing is in terms of working, the teams are working very, very hard. In fact, they are, they're saying there's no difference between a personal life and a professional life. And we have delivered some very, very big projects to bring this video. So, the third thing was the team is realizing is in this moment where, what is moving from offline to online, I think the tailwinds in the headwind of business are in our direction. So every member of Dailyhunt wants to now capitalize and not in the wrong sense, but saying, Hey, we got to work harder and make this work because this is the moment where we can give more value to customers and increase our penetration in customers. over last two years, we have grown our MOUby five times down by six times revenue by seven times, as Umang told this year, we intend to increase our revenue, almost double, we are going to reach a hundred million plus dow. And the company is well-capitalized in this COVID times we raised some money, which all of you guys know about it. Andwe're off to the races.

Vikram:

That's a great point to sign off on. And with you guys, I can just keep talking forever. And we have done that in the past, where we have gone full night talking.

Umang:

Just quickly wanted to add,during COVID, the whole platform has pivoted its value proposition where, you were a consumer, which was a one-way street, but now every consumer has become a creator and a curator of content. And that is driving a huge amount of vitality, a huge amount of growth because we realized that the party was happening outside Dailyhunt, every month they were a hundred million shares on WhatsApp. And we said, Hey, let's give the local language users, a local language, Twitter, and a local language, Facebook groups, user experience and seeing a lot of positive momentum around viral growth and organic growth, both of the platform and all the content. And on the time spent, but it also gives us a social graph and a content graph. I think if I would just say the last thing to add to what Viru said, I think COVID has truly brought out the, I wouldn't say it's a culture-defining moment, the culture was already defined within the company, but for us, for Viru and me, it's very pleasing to see the way the team has reacted in and the way they're building and that, hunkering down heads-down focused. It's all built on a foundation of a very strong, very solid culture. And I think if that was not a core ingredient-I don’t know if Viru and I did a HR session to focus on it, I don't think we did. At least I don’t remember.

Vikram:

I don't think you guys did.

Umang:

But for whatever reason, I think the culture has just emerged as just holding this whole ship, really strong.

Virendra:

It is what we practice, gets the culture, right.

Vikram:

No, I was just going to say that, I don't think you guys did like long sessions or it is actually just leadership by example, and people are just following that by example. Thank you so much for sharing the journey and beingsuper candidon this issue. I think it's obvious to our listeners, the respect, the give &take and then the brotherhood that you guys share and sort of really comes across, even in the brief conversation with you guys and I would say I would sign off by, Viru had posted this Twitter pic from Sholay, where he had Viru and Jay from Sholay, saying “ Ye dosti hum nahe todenge” and that sort of sum’s it up for me. So congratulationson the partnership and I'm hoping this podcast inspires others, to develop that inspirational partnership along with their co-founders. Guys thank you.

Umang:

Thanks a lot, Vikram thank you.

Virendra:

Thank you. Thank you for doing this.

Salonie:

Thank you for tuning in and you can find the transcribed version of this podcast on www.matrixpartners.in you can also follow us on Twitter and LinkedIn for more updates.