The inMobi journey

Vikram Vaidyanathan, MD, Matrix Partners India, catches up with Naveen Tewari, Co-founder, InMobi, who unravels the journey behind building India’s first unicorn startup. Naveen gets candid about strategies implemented for expansion to international markets, creating a family-like work culture and rising above the challenges that come with building a weatherproof company.

Vikram: Friends, I am with Naveen Tewari, founder of India’s first unicorn. And he has consented to share a fascinating journey of entrepreneurship and lessons from his journey. Thanks so much for hosting us in the office. Naveen, it’s always a pleasure to be here. He has just got fantastic energy for the last. However, many years I have been coming here.

Naveen: Absolutely. Welcome Vikram. And thank you for inviting me to this show. And I love your socks by the way. And they are so bright that I am just absolutely enjoying having this conversation with you while getting distracted by your socks.

Vikram: It’s in keeping with your office.

Naveen: There you are.

Vikram: I want to give my introduction to Naveen. And he really needs intro. Maybe most people don’t know, you were born and brought up in Kanpur on the IIT Kanpur…

Naveen: Proud UP.

Vikram: …in the IIT Kanpur campus. Born to academics, met his wife when he was 10 years old in fifth standard, both…

Naveen: She didn’t become my wife when she was 10.

Vikram: Well, that’s true. Over a very long courtship lasting from Kanpur all the way across different cities.

Naveen: Grit and perseverance is always there.

Vikram: Absolutely. His early journey spans IIT Kanpur, Mckinsey, HBS, Charles River Ventures, I would like to say his journey really started when he founded InMobi as mKhoj. Personal story about Naveen and me, I equal parts blame and credit Naveen for getting me into the VC space.

I was at Mckinsey doing a project on digital India, and Naveen was the expert on-call. And at the end of that call, I realized I know nothing about tech and that’s not acceptable to me because I started life as an engineer and decided to take the plunge. I must tell you in all my arrogance at that time, I thought I’ll do whatever Naveen did, which is went to Mckinsey then went to Charles River Ventures, which is a VC and figure out what spaces is hot and what spaces is happening. And then, I will start out in that space. But I became a VC and I realized how hard a founder’s life is. Also realized that I would not make a great founder but found my calling in early stage venture capital, so for that I thank you.

Naveen: I love your humility by the way.

Vikram: But all of this to be honest has led to a lasting friendship. I truly treasure that. So, thanks for the time. We’ll keep this conversation freewheeling. And given that we are at your office, I thought we will start with early days at InMobi. People know the transition from mKhoj to InMobi. But what do you really remember from those early days?

Naveen: First of all, thank you for the introduction. It was good to reminiscence these old days. And I don’t know whether you want to thank me for the shift to this wild crazy world of startups or not, but I think the many founders out there really love having you on their side. So, I would congratulate you on how you are perceived within the founding community. So, great work and being an entrepreneur friendly, return giving venture capitalist. I hope that return giving is already happening. I shall also know at some point of time.

But I think on the early days of InMobi or mKhoj as we started off back in 2007 - 2008 almost 11 years ago, I think you are asking about the stake. I think it’s very lonely in the beginning. And nothing seems to make sense. And you always want to give up. And I think that when you want to give up and your quest to continue has very limited reasons and rational mind doesn’t allow you to continue and I think I personally wanted to give up many times. Probably once or twice a day at times it reached to a stage where I just wanted to kind of give up and I think we didn’t. And I think that to me was one of the most memorable pieces of that time. And I think from things that I thought we - I always tell people who do things today to have done differently at that point of time would…

I don’t think when we started mKhoj, the idea of mKhoj was big. The idea of mKhoj was relatively very limited. So, I would say in today’s world if you are trying to start a tech company, anyway it’s going to be a hell of ride. Anyway, it’s going to be very tough. Anyway, it’s not going to be easy. You will not have a life. So, why not actually go from something which is going to big. So, instead of trying to do something which is small. So, I would say at least that to be a thing that I would go back probably correct.

Vikram: I know you advice a bunch of founders. You have invested in a bunch of companies. What do you do? And I know that you have played a role shaping some of their ideas or at least their go-to market to make sure that they go after the big ideas. How do you do some of that today?

Naveen: Look, I think people are generally very smart. All the co-founders you know them a lot better than I probably would. Some very, smart people. And everyone is not - no one struggles with capability. No one struggles with hard work or able to tell a story. Most of them can actually. Nobody struggles with these basic things. They are essentially captive of their own thinking in some shape and form.

And obviously having done this for 10 plus years, there is one thing I probably know is that they are captive of their thinking. And so, the only thing I would probably try to do is to help them seal slightly bigger picture of their own idea. I can’t probably draw that out for them because they should do it and they will do a better job than me.

But, as much as possible if they could see a bigger picture of their own business, they might change the direction. So, my view in life has been that if you put a goal post, which is slightly far out there, it’s not that you need to be rigid about it completely, but you at least chart out paths to get there differently if the goal post were at a different level. And if it’s too close by, you take a different path, but that’s not going to get you to bigger play.

So, I think that’s largely what I try to do. And I enjoy it because when some of those guys later on come back and say, hey, I did this. You feel satisfied because those are businesses that you can never win. But I also don’t make money like you would by investing in them, but at least I enjoy doing that.

Vikram: I think that’s a topic for another day on who was more successful as an investor. But I love the phrase on captive of their own thinking. In our parlance we call it which is just go seek ideas from outside about your idea and about pretty much every aspect of your business. And that’s a great way to actually make your own idea much bigger.

I am going to switch gears to InMobi and the fantastic organization that you’ve built. One aspect of the organization which is this big international org, you have gone after so markets. Some markets you opened. Some markets you expanded. Some markets I know you stepped back from. What’s the learning on building this international org and the secret sauce to it?

Naveen: Look, in the beginning when we decided to for an international market, it was more as a forcing function for us because around 2010 or so, the digital markets in countries like India even in Asia was relatively smaller. So, we were frankly forced to figure this problem out, which seemed like a daunting one to begin with because everybody rightly would say it’s a very hard problem to solve. People struggle to solve things for India.

But I think the thing that you find when you kind of jump into a hard problem that is actually not that hard when you are into it. So, part one at least to me was it’s not as hard as we think it is by the way. If you put your mind to a few countries and a few markets, you can actually go and solve for it. And you’ll have to figure out whether you have to make changes to the go-to-market phenomenon by market you have to have a different org strategy by market. You need to also have different tech strategy by market.

And as you go deeper, it becomes harder and harder and harder by the way. So, if you need to have a different tech strategy for a different market, then it’s a very hard problem to solve.

The second we never sent anybody from India to set up those markets. We always hired a local person and we had that person lead the market in. And so, in scenarios where that worked, it worked brilliantly. And in scenarios where we got a wrong person, it failed miserably, and it had nothing do with the market or the size of the market or anything. It was just literally boiled down to the leader in the market and if the market worked, great, we exactly knew why it worked. If it failed, we exactly knew why it failed.

In hindsight by the way, I would make a statement to say maybe we could have done a better job of kind of sending few people from our home base to act as a strong connect back to the mother ship. And we didn’t do that then because we probably didn’t even have enough people who could do these kinds of roles and maybe just didn’t get it. But, that certainly worked out well.

Vikram: So, the prevailing wisdom is to get somebody from the founding team to move. And I know now Abhay is being convinced or volunteered to move to the US. How big has that been?

Naveen: No, I think by the way that’s the other learning that I had was or we actually all had a founding team member is there are places in which we can have an effect - have an impact. There are places we cannot have an impact. For example, in China even if we move I don’t know what impact we can really have. We have limitations of our own in terms of what we could potentially have done. And it was also very risky market for us to say, hey, if we even go there, we don’t know whether at the end of three years we will have anything or not. But markets like US, I completely agree with you for the past five to six years now we have had one co-founder or the other actually based out of the US. Amit was there before. Abhay was there and then Abhay went in there.

So when Amit first moved to US, our business was about 15% - of our total business it was 15%. Today, it’s about 55% comes from the US. So, we obviously were able to scale US business in general to quite an extent.

Vikram: Shifting gears and talking about the culture at InMobi, I have always been amazed at the quality of talent that you have been able to attract here. What do you think has been integral to you being able to attract that kind of talent whether it’s from the IITs and IIMs, from Mckinsey. It’s a one signal of pedigree. But, you have always been able to attract these guys.

And second part of that question is that InMobi has also spawned lots of entrepreneurs. You have created this entrepreneurial atmosphere internally. I know you have area for entrepreneurs in InMobi and you are very comfortable letting go. You invest in all of them. How have you created all of this?

Naveen: And this kind of goes back to a story. Let me just layout that story before I answer this question because it’s not something that that came in, I would argue our culture wasn’t something like this on day zero. There was a point of time that we said, hey, we just have to be a different company to a certain extent. In about 2012 - 2013, when we were rapidly growing, and we saw, and we had massive funding and we just were hiring people and all the right things that we thought logically we were going to do, we realized that we didn’t grow as we were investing.

In fact, we thought we would grow 3x or something in a specific year. I think 2013 or something. And we only grew like 40% which is not bad. But it was not 3x. And we had probably an attrition of like 30 - 35%. And our company became like a revolving door.

Vikram: Oh, I didn’t know that.

Naveen: And it caused lot of pain in me personally because I was like, hey, I think we have everything right. Look at the headlines, look at revenue growth, look at the potential. Everything was right, but nobody was staying. And it hit me at that point of time is that the headlines - the external headlines are a great way to get people in. But the core strength of the organization is the one that keeps people there.

And so, it was the first time in my life where I was able to segregate between these two things. And so, whenever I personally now look at any organization, I look at are good people staying there or a good people leaving. I don’t, for example, worry about what the media is necessarily saying because I know people internally will know what the company is all about.

Now this is a great state to be in, but how do you get to this specific state? So, our view on this was let’s build this place as a place - it was simple thing for me by the way. Let’s build this place as a place where I would want to be. That was it. Let’s do anything and everything that I would want to do. And I am not eccentric person of extreme nature or anything of that sort. And I said, look, if I…

Vikram: We can debate some of it, yes.

Naveen: It was simple enough to say if I - what kind of environment do I like to work on. All right, I like to work in an environment where I am given freedom. What kind of interactions do you like to have? I like to have respectable interactions. What kind of a system do you like? Well, I like a system that where I am trusted. What kind of growth do you like? Well, I like growing professionally and personally. And I want to learn more things. What kind of people do you want to surround yourself with? Well, people that I would want to be surrounded with irrespective of whether they worked at InMobi or not. I just want great people around me.

So, we then kind of used these very simple - overtly simple frankly if you were to ask me, things. And then said, okay, let’s just build polices around this. So, every policy of ours was basically built around this. For example, I will give you one more. Do I really like to be asked and given marks at the end of a quarter or a year to say, hey, you did - if I were to ask somebody, hey, how did I do? Well, it seems that you got 3.7 out of 5. You are not in school anymore. We can’t do these kinds of things.

So, we changed everything. And we basically converted - try to convert InMobi into a place where people can come in and have the freedom. You have freedom to essentially go and work in any other team that you want. Because why? Well, each of one of us - think of yourself, what do you enjoy about your job? The fact that you can work with many people and different environments.

And it took us a year. And from that day onwards, you have touched it. We don’t spend anything trying to build a culture or do anything because this is it. This is who we are. And we don’t try to fake it. We don’t try to like create programs around, hey, what’s my culture budget and what should - because we don’t need it anymore. It is who we are, and this is how we are going to stay. And what that has done by the way is when were in tough times, which I think every company get to, we will tell them, hey, we are in tough times. Please help. And they will all - it’s funny whenever once or twice we have been in tough times, it’s like a family that comes together right now.

Now I know for a fact that if you build that out there, I can have different strategies. Today, we have three companies that we talk about or maybe there is something else or the strategy for the marketing advertising business changes, all of that fine. But if this is there, I know I can build something for a long period of time. So that’s why it’s important to me and we didn’t even do too much get there by way. We just did some simple things.

Vikram: Firstly, this shows how much thought you have put into this and how close it is to your heart. And the one thing I will take away is build a place where you would work. And I think that’s a great way of thinking about culture for founders.

Talking about tough times, I know InMobi had its fair share of ups and downs and at time public with a lot of noise around it. And sometimes, you get support from your internal guys. Sometimes you don’t get support. Sometimes you don’t get support from external people that you thought you would. How do you drown out all the noise? And I know grit and perseverance is big on your list. But take us through some of those moments. What keeps you grounded and centered, and what’s helped you through some of those of downs?

Naveen: Yes. Look, I think tough periods are very common. And I think some companies in today’s startup world get accolades - far higher accolades than what they deserve and us as part of that. Or, we get beaten down far more than we should for the mistakes that we would have done. So, it swings both ways extremes and you have to learn to accept that to begin with.

Yes, three - four years ago, we were public ally - media ripped us apart to say, hey, company is dead. And it was one of those things which you didn’t know to begin with how to handle it because you looked internally. You were going through a little bit of tough phase, but you didn’t realize that what you were being told by the external and therefore the pressure on you was so much outside in as against inside out to say, hey, I don’t know how to really handle this. There was a sense of being dismissive about it. There was a sense of saying, look, everybody is against you. You have all of these emotions that kind of rile you up to begin with.

I think what gives you comfort is to kind of look inside the company and talk to people internally and really talk to them and say, hey, look I know we are getting beaten outside. What do you think? And you see some of their responses. And the people internally will be genuine with you. And so, when that happened with us for the first time, I kind of gathered the courage to go and talk to my own team to say, hey, look I know we are getting beaten from outside, do you really think it’s all true? Or am I just blinded because I am like this optimistic founder and am I not seeing something?

And the response internally probably gave me the biggest strength which was to say, hey, yes, Naveen, we have two issues. And we have 25 things which are going great for us. We have to solve for these two issues. Here are the ways that we can solve for. And everybody had their versions of this. And my job was to A) First, I kind of gathered a lot of confidence back into the company personally which I could then reciprocate back. But, also you could come back and say this is how we are going to do this.

I think what happened for us was we basically put our heads down, and we said, we are not going to try and call out anything which is going to be, hey, we are going to win the world cup. We are going to say, we are going to go one match by one match. And we called it out. In the beginning we said, month by month. Then we said quarter by quarter. Then we said half yearly by half yearly. And we said yearly by yearly. And we just executed, executed, executed. And we solved one problem and the next problem. And within the first six months, we were out of the woods. But that gave us - if you go and do this extreme exercise of whatever body building, extreme sports, you become very strong. And I thought as an organization we went through that phase of six to nine months where we became very internally - our core strength was really strong and a lot of things that we did then we do very systematically. We do it very properly. We don’t splurge money. We don’t do random things. We just do them. And we don’t also talk about it anymore because we realize that talking about it too much is also not probably needed because it gets - you get hit both ways with it. So, we just become more - we don’t talk too much to media about those things anymore.

But I think more importantly I think some of things that that were put up at that point of time are now coming out whether it’s the company that we announced about a couple of months ago which is TruFactor or - that we just became far more public with. And each of those companies are very large by the way. But we never talked about them for the longest period of time. We kept them under the wraps and we kept executing. And all of that I give a lot of credit to what happened three - four years ago because we just do things much better now.

Vikram: I think honestly, it’s a beautiful story. And it gives you a glimpse into how much founders have to go through to actually build institutions. You and I have talked about this often that the pendulum swings a lot, both positive and negative in our ecosystem. And even for investors it swings a lot. And you have spoken about the fact that as an investor my conviction is tested multiple times over the course of an investment. And I have asked you for advice on some of this. What is your advice to investors when the pendulum is swinging the other way?

And as an investor, my role is to for some companies in that period I have to double down on, some companies I have evaluate carefully and maybe they won’t make it. So, I am playing that portfolio but what’s your advice for investors working with founders through that period?

Naveen: Look, I think there are two - and this is my view on this. And I am not an - I may have a slightly different view in the way I look at this. Look, I think I would possibly look for saying, are you backing a business model. And I know there is a stage of the company, but irrespective frankly, are you backing a business model, are you backing the co-founder of the team. And I think that decision has to be made.

And I think if you are deeply into a company, then you would know who are backing by the way. And most of the examples I would argue that you would back - go and back not the business model but the co-founder because the business models can change, evolve, tweak and you can come back in. And I think that is only done when you have a long-term relationship with the company with the co-founder. And you as an investor is possibly only tested in tough times.

And that’s when the entrepreneurial community essentially looks up to you and say, all right, this is the guy that we want on our side because anybody can back a great business model and keep backing it while it’s great. Every business model today is technology business has three-year shelf life. And no return in any fund is ever going to come in three years. So, you possibly are going to see two changes in the business models for sure for a scale company by the way irrespective of how you look at it.

So, the point I was trying to get to be you end up A) Backing the co-founder or the team, and B) Be ready for that phase where the business model is going come in and change. And that’s the swing factor that you are looking for. And I think that conviction that you are referring to and the point probably is only around not the company but the team.

And so, are you backing the team? Are you not backing the team?

Vikram: I couldn’t agree with you more. I was talking to someone the other day and we were having a conversation on top 10 relationships in life. And I realized of the top 10 relationships in life, five are with founders of my companies. And all those five relationships they have been formed during tough times. And frankly, I treasure them, and they treasure those relationships because we have just gone through those tough times. And also, for me, that’s what makes at least my role fun to be with those companies and those founders during those tough times.

Naveen: By the way if you look back and you see, most people create great success with the same set of people repeatedly. And they stay together whether it’s businesses or teaming up. And they always do it together like there is always this a loose cohort of people that are always together. And I somewhere feel by the way and its very disconnected point to the question that you are asking probably is I somewhere feel India lacks that to a certain extent because I think a lot of us are far more in a very small individual buckets of ours versus as cohorts of people who are there to kind of support each other a lot.

Vikram: So, I was going to ask you this question later, but I will come to it now, which is you have come this realization of I want to work with friends which by the way sounds like a very old man thing to say, but how have you come to realization? And what’s advice for sort of early founders on applying some of that?

Naveen: Yes, maybe it an old because I am turning old probably, but I think the - well, you realize that you want to be with people who either are friends or become your friends. And friends are not to be confused with saying you are letting go off each other’s mistakes. That’s not the point that one is trying to get to. It’s not that, hey, I am going to easy on you. That’s not the point. It’s to say I can be open with you. And you realize that you need people who will back you in tough times.

And therefore, for me by the way loyalty is a huge aspect within the company itself. For example, about 35 maybe 40% of the company or people in the company have spent more than five years and we are 10-year-old company. So, have spent more than five years. My management team has spent an average of 7-1/2 years with me. And to me that’s loyalty. And to me both ways. I know they are there me and I hope that I am there for them. And to me, that’s friends. It need be that I must hangout with them every social evening. But just the fact that you have a strong bond where just the look - you look into the eye of the other one, the other person knows what you are going through. And the nod from their side to say we will solve for it is the exact thing that you need.

And the reason why I say this even to the younger entrepreneurs is because you are going to face a lot of that soon. You just don’t know when, but you are. And you cannot fight that alone even though we will all think of ourselves as these amazing warriors that we will go and fight this ourselves. Why fight it yourselves when you can fight it few others who will be on your side. So therefore, I am a big fan of having people, having investors - having people as advisors by the way if you need them to be so that you are surrounded by people who will support you through the good and the bad.

Vikram: I think there is a very important learning there for early founders. And I often urge founders to date their co-founders for extensive period of time. And sometimes you don’t have that extensive period of time. But actually, hangout with them in different settings and don’t just do one or two coffees together. Go sit with their families at home. Actually, go do an activity together. Do whatever. If you guys drink, go truly have a lot of drinks together. And that usually helps because you can’t fake chemistry over multiple interactions. And then you really find out what makes that person tick. And I think that’s what ends up with these lasting co-founder investor partnerships.

Naveen: Absolutely. And by the way, I think I also tell this to a lot of the younger entrepreneurs right now the new ones who are just starting off like when we started off 10 years ago, we didn’t really have a pool of advisors to go to. We didn’t know anybody who would be stupid enough to do what we were going to try and do. The group now actually has bunch of people who have been stupid enough and have tried to do this. And so, getting them into the fold in some shape and form is far more important because the best advices are not the ones that are made on like Excel Sheet or PowerPoint. They are basically just like simple little nudge to say why aren’t you doing this versus that.

And to me, those are the most valuable ones that have gotten throughout my life and they come in the most innocuous of the places. It would be when you are sitting somebody next to on an aircraft or just catching up on coffee and you don’t even intend to be getting that advice whereas you get it and that changes the direction in which you are moving. Those are the people that you should surround yourself with such that you don’t know when you are going to get something. But you have to at least create the environment for it.

Vikram: Okay. And you mentioned this aircraft thing. I don’t know if you remember. You and I spent I think three hours on a flight from Bangalore to Delhi and it was like a delayed flight. And we ended up in the emergency route together. And I think we didn’t even realize that that flight was that long. And one another thing I took away is how curious you were about everything that was happening and what we were doing. And I know you keep pushing yourself on this personal growth. You took on the board role of Paytm. You have invested in multiple companies. We are in Razorpay together. And I know you invested in NestAway. What dimension does that give you, hanging out with some of the other startups? I know it’s a time commitment and I know you take that role seriously.

Naveen: Look, I think each one of these guys are phenomenal people whether it was Vijay at Paytm or at Razorpay or Amar at NestAway. And there are 15 - 20 more. I think there is so much to learn. It is kind of is oxymoronic, but they kind of pay to learn literally to say I could have done, I could have paid just to sat on their - to get whatever sit in the conversation that they were having because I took away so much.

And I think it is on one hand, it keeps you very agile and knowing what’s really happening in the world because you are living in your own cocoon. And it was phenomenal by the way, but you are just in your own cocoon.

And secondly, every one of successful entrepreneurs out there has a quirk. They are not like a very templatized.

Vikram: They are not normal people.

Naveen: They are not normal.

Vikram: Founders are not normal people.

Naveen: They are not normal. So what quirk is great that A) You will not actually be able to build on it, but at least capture some component of it because the reason why companies become successful is not because you do all the right things. It’s because you do one of those things phenomenally well. And what is that one thing that’s getting someone to essentially create this what can you take away from that. And the learning has just been phenomenal from that perspective.

And people will ping you at any point of time in life by the way. That’s the beauty of these conversations and these relationships that you end up building with bunch of them. And they ping you not when they are having a great quarter or anything, they ping you and they say, hey, I am stuck, and I need help here. And you kind of sit through there and we spend two hours probably and that may be just it.

Vikram: So, we are in a couple of companies together. And what I have heard from founders is that Naveen says things that others just don’t say. And he is available in the middle of night. And to me actually, frankly, that’s great advice for me because that’s what they treasure. So, you should feel very good about that.

Naveen: All right. Don’t tell my wife that we are working too hard.

Vikram: I think she already knows. I don’t think anything is hidden from her. Naveen, I don’t have anything else. I know you have been very kind with your time and I can keep going on with you. But thank you so much for the time. Truly appreciate it.

Last quick question. I know you don’t think beyond InMobi, but if you were starting today, what business would you start up?

Naveen: Look, I think there are obviously horizontals in which you could think about. There is obviously artificial intelligence that’s just changing the world. There are things around blockchain. There is thing about I think probably something in the education space could be very interesting today. Something in the retail space could be very interesting. I think all of these industries are completely going to change in the years to come. And they are very one should say still old economy in the way they are functioning. So, I haven’t really thought this very deeply by the way.

Vikram: Yes, you named like four different things.

Naveen: Yes, exactly. I have never thought about this, but maybe next time we catch up, I might have a better answer to you than this.

Vikram: Excellent. Thanks again for the time, Naveen.

Naveen: Thank you, I enjoyed talking. Thank you.

Naveen: Take care.

Salonie: Thank you for listening. And you can find the transcribed version of this podcast on matrixpartners.in. You can also follow us on Twitter and LinkedIn for more updates.