Alok Kejriwal is a serial entrepreneur who founded his first venture Contests2win.com as a contest promotion website in 1998. His second venture Mobile2win was acquired by Walt Disney in China and Norwest Ventures in India. Kejriwal’s other ventures include interactive agency Media2win, gaming site Games2win.com and digital creative agency C2W Digital. In an interview , Kejriwal talks about his entrepreneurial journey and gives us insights about the internet industry in India.
What was your inspiration behind becoming an internet entrepreneur in India?
I come from an affluent background and hence money was never a motivation. I think the motivation was the Marwari family setup having a lot of businesses of its own. In any Marwari family, the legacy business is always over-run by people and not under-run. My father had a business of his own and also had two uncles involved in it. So, you can call it concealed employment.
With me there were problems in the state of affairs I was growing up. Firstly, I was not exposed to the real world because of too much comfort and too much of business created around me, and secondly, I couldn’t get along with my father and brothers. So, both drove me to think that I should have a business of my own. But the watershed was the corruption and bureaucracy involved in the business of manufacturing. My father runs a hosiery factory in South Mumbai and every day I used to see about two to three inspectors coming there for bribes. So, mentally I was pained to think that I will have to do the same thing for the rest of my life. Hence, I wanted to do something new.
And finally, Sabeer Bhatia [The Hotmail founder who sold his web-based email service to Microsoft for $400 million in December 1997] happened to the world. Whether now people like him or not, we don’t care, but in 1997-98, he was considered to be God’s gift to mankind who liberated people like me. Through that acquisition, he made us realise and believe that something in the non-manufacturing and non-brick-and-mortar business can create more value than your family has ever created in 100 years. So, that is what made me try out entrepreneurial ventures on the internet.
Walk us through the story of your entrepreneurial journey of launching Contests2win.com and eventually the entire 2win group.
I always believe that one creates a business when there is an opportunity of creating this. The philosophy is to spot problems and figure out whether they are good enough to become large businesses. At that time (1997-98) everybody in India was running contests which were nothing but advertisements in the disguise of a prize so that the consumers pay attention. But the process of getting a response was very poor. Postcards were supposed to be sent to PO Box offices, on TV the contest would play out for 28 seconds and in two seconds they would tell you where to send in the responses. So, they were pretending not to care for you. I found that to be an irritant and thought whether we can create a digital warehouse of promotions and competitions.
My moment of truth came twice at Unilever (Hindustan Unilever). First time when we went to them with the idea, the brand owner of Annapurna (Annapurna Atta) asked me, “What’s the internet?”. I almost fainted because, if Hindustan Lever, who at that time, used to spend about Rs 1 crore a day on advertising — today, they spend about Rs 3 crore — doesn’t know internet, I am dead. On another instance, a brand manager of Liril told me that in this factory we create soaps and not contests. So, if you want us to run a contest, you create contests and bring them to us. So, I had to reinvent my concept time and again. But it has always been that brands like consumers; consumers like prizes and hence, brands like prizes. That is the triangle and if you can spin it in a way that people keep coming back, it works.
Contests2win was an idea in the late 1990s and early 2000s. Since then India has gone through the evolution with people asking, “Do we have enough time to spend on contests trying to win prizes?”. Then the movement went on to the mobile phone, which you always carry with you. At that time the Indian Idol was the biggest contest on TV, after KBC (Kaun Banega Crorepati). But in KBC you could only watch one person winning and not participate, while with the Indian Idol, one could be a winner with their idols. So, we powered the mobile contest of the Indian Idol, and thus started Mobile2win.
As we had broken even in the dot com period itself around 1999-2000, our investors SoftBank and News Corp asked us to bring the concept to China. In China, you can’t rest easy after buying a spot in one television channel (resembling the size of Colors in India) because there are at least 25 more channels which have the same magnitude in coverage. This is just because of the size and magnitude of the country. So, we asked those brands to add a layer of contesting in their TV ads and ask the viewers to respond back. Thus the brands could easily get to know if the people are actually watching the ad or not. So, this (Mobile2win) was an interactive solution to the brands in China and that was eventually acquired by Walt Disney.
In a conference, Sam Balsara (who is currently chairman and managing director of Madison World) once told me that in television, there is no more space to put advertisements and digital is the only solution. Hence, a thought came to my mind that if so and so is saying this; why not create a media agency that is interactive. And hence, Media2win was formed. So, there has always been a cause and effect feeling related.
Again in 2005-06, I saw that gaming had become very popular. Every kid would spend a good amount of time playing those stupid games. Moreover, a lot of creativity was spent in appealing that animal which was definitely not you and me. So, gaming had to go mass and it was almost a prerogative of Electronic Arts or Sony that we only could manufacture games. I felt that gaming has a great consumer wave as it could create involvement and engagement. And if you create it digitally, everyone will play it. Thus, Games2win was setup.
Contests2win was launched at a time when internet was not popular in India? What challenges did you face in convincing various brands to partner with you in launching contests on internet?
There were a lot of challenges. First, internet was not understood my many brands and I feel, even today, it is still not understood by half of the brands. Here the brand owners do not know that if they make a car, they need to have a tyre. They don’t realise that they should be on internet. The second challenge was getting good employees. After the dot com bust, I met people who agreed to work for me under a condition that we should remove the dot com word from the visiting card because their family felt that dot com is a failing business. So, there was a resistance of understanding the medium. Even today, my family can’t tell my relatives what I do. So, the medium itself is so unclear that it makes a very tough business for us to be in. Financing in India has also been a major problem. For a dot com to get financed in the Silicon Valley is very easy but in India people would rather finance a cement factory than a dot com. So, converting the so-called financers into risk takers was not easy as it needed patience.
I believe that India is a land of digital Tsunami. Everything happens here at the same time. Mobile phone in India came along with internet, DTH, WiFi and radio; whereas in the US, every wave took 10 years to establish. Satellite TV came 50 years ago; then came VCR, TV, colour TV and then internet came. Now, they (the people in US) are learning how to text (SMS), something we have been doing for the last eight years. So, every industry in the US has been through a decade to grow, establish and monetise before another guy came over. But in India, everything happened between 1999 and 2005 and so nobody got the chance to create something deep.
It is not easy to create ‘invested branding’ in India because the results take long-term to come. Only Coke has the guts to create a ‘chhoti chhoti boond’ concept, but why can’t Dabur create the same? Because they are so short-termist in their view of ROI (return on investment) that they want to do sales driven advertising. And that is not Dabur’s fault; rather it is the market where the mentality is ‘invest today and get the return tomorrow.’
How tough was it to get consumers adopting the online platform?
Indian consumers are always ready to take new concepts. The beauty about this market is that the people are always ready to try new things. In Japan, the average age is 55 and you can’t try anything new there. Everything has been tried out. But India is a young and vibrant market. But spending money on getting the consumer is not something that is advisable in India. Here, if you are spending money on the consumer you better have something to sell to him on the spot, or else you are dead. The challenge with Indian consumers is in making them adopt. It took 10 years for Barista and Café Coffee Day to make Indians drink coffee. But these companies have never advertised, rather they have been there on the consumer’s face.
What kind of traffic does Contests2win get, and what has been the growth rate of the site in terms of revenue?
I would rather reveal the numbers of the entire group because we have so many interests together that identifying the traffic of individual sites won’t help anybody. So, as a group we have shifted a lot of our content to Games2win because they are game based contests. Besides, we have two new sites called Chimpoo.com for kids and GangofGamers.com. So, if you look at the comScore numbers, we get around 5 million unique visitors per month on our group portals. And outside the Contests2win network, we get around 10 to 20 million unique visitors. So, we cater to around 15 to 20 million users every month and out of that 5 to 7 per cent of users are from India and the rest come from other countries. So, the large per cent of our audiences are still external.
The revenue has always been advertising driven so far. So, the challenge has been to get the revenue recur once and again. Given the entire group’s business which includes Media2win, Contests2win and Games2win, last year (2008-09) we closed at Rs 25 crore and this year (2009-10) we hope to close it around Rs 30 crore.
In 2006, Mobile2win’s China arm was acquired by The Walt Disney Internet Group; and in 2009, the company’s Indian operations were merged with Altruist. Any specific reason for moving out of the mobile business?
Here is an interesting story. Actually in 2006, after Walt Disney acquired Mobile2win China, Norwest Venture Partners (NVP) acquired my stake in Mobile2win India. So actually, I was not involved with Mobile2win India after 2006. I was personally bought out and the company was run by NVP, Nexus India Capital, Rajiv Hiranandani, Tushar Shah and Gopala Krishnan. So, we really got lucky in 2006 as we were acquired twice. Moreover, in 2006, I saw a very dark cloud on the mobile VAS (value added service) horizon. We were going to mobile operators and they were treating us like dogs outside the restaurant; when we were taking content to them, they treated as if it was no big deal; we were paid our dues after six to seven months. So, I found something wrong in the business model. Taking somebody’s content to somebody else and trying to make money out of it is not a sustainable business model. There was no value addition we were creating. Today, we create games and we also create audiences along with it. So, I got out of the mobile business and one paid me lots of money to get out of this, which is like an ultimate fantasy.
How do you plan to unlock the value of your group companies? Do you see yourself exiting your businesses as you did with Mobile2win, or is there any plan for an IPO?
In our kind of businesses, a revenue of Rs 25-30 crore is not an IPO-able business. Today, the Dalal Street speaks about companies with revenues of Rs 500 crore and more. As of now, I do not have an IPO-able business at hand. Moreover, in India, we are over fascinated by IPO. Everything is either IPO or a failure. But the actual success is liquidity. If the business can grow from Rs 10 crore to Rs 20 crore and get liquidity in terms of acquisition, it is also an IPO. One should look at IPOs in being private IPOs and public IPOs. Private IPO means exchange of a business with incremental value and I don’t think public IPO is the answer to everything. Google went IPO because they had to go IPO and their investors dragged them, but Google founders didn’t want to go IPO. So, IPO is a very difficult animal, as once you go IPO, your entire vision is only quarter to quarter. The Wall Street laughs at you if you say your plans are for two years. They want QoQ (quarter-on-quarter) results. It is a curse to tell yourself that I will go IPO. The bottom-line of any business is to create value for your employees and investors.
However, there are two ways to exit the business. Everything is not about strategic sale and acquisition. Some very good businesses can be created if the people and who run that business are enriched by salary and job satisfaction. Having said that, the investors who come in should be retired. As long as you give them their rewards and still manage to run a business, everybody is very happy. So, it is a myth that every business in the internet is successful only when it gets acquired. Before the internet came, people made businesses that lasted for 200 years.
Before Walt Disney bought Mobile2win China, they showed us a 30 or 40 page slideshow depicting how they would have run the business if they were the owners. After seeing that, we realised they could run the business better than us. So, when you see that somebody else can take the business to a completely new orbit, which is when you sell the business. What would Hotmail be without Microsoft? What would YouTube be without Google? So, businesses need to be acquired by people who can create value around the existing business.
C2W Digital is a new entity. How do you expect the business to be in the coming fiscal and what are your future plans for taking it to the next level?
C2W Digital is a passion business that has been drawn out of a team within Contests2win who love to do businesses with brands. We felt that Contests2win was always perceived as a contesting and promoting business where people come, participate and win prizes. This was actually making a wrong conception about the entire business which also serves as a digital agency. So, we carved it (the agency part) out and gave it to Gaurav Sharma to run. He has a 15 to 20 people team. Now, the client also feels that C2W Digital is a separate business of creating digital communications. I have always driven inspiration from Music Television which later became MTV. Now, MTV is not a channel that runs stupid music all throughout. So for me, Contests2win was C2W Digital always.
On the games business, we are going to embark on very serious social games on Facebook where consumers will hopefully pay us money. 2010 is the year we break out of trying to collect money only from brands and go after consumers. Zynga (the creator of FarmVille social game) has already proven that there are lots of money that consumers are ready to spend for a virtual tractor and virtual animals. We believe that given Games2win’s international visitors, we have the population of going after that.
Can internet be regarded as a good place for brand building? How can we get offline brands to spend more on internet?
The answer should be what kind of brands you are trying to sell. For instance, some days back I wanted to buy a pen drive and landed in a shop in Gurgaon that sells peripherals. But I couldn’t relate to any of the brands there. So, if you want to drive a pen drive business in India, internet would be the only medium to be on. As the market grows, more and more brand building will happen on the internet in India. Currently, the market is 40 million unique visitors and not 400 million. For 40 million, the obvious brands suitable for online advertising are those that thrive on the internet. Logitech is pretty much built on the internet. But as that 40 million grows to become 80 million, more and more brands will be able to create a buzz on this medium.
For FMCG (fast moving consumer goods) brands, today, internet can serve as a reminder medium. If Coke launches a new flavour, they can’t build it on the internet as the population is not there. I am not saying that the medium is not capable, but the population is absent. Outside India, brands do get built on the internet. Volkswagen’s new Beetle was launched on the internet; McDonald’s is switching all its money to the internet; movies are being released on the internet worldwide; but in India with this many (40 million) online people, you can’t build a brand on this medium.
Display advertising is where the big money is; big money is not in leads generation as they don’t make much sense to FMCG brands, which happen to be the big ticket advertisers. And online display will increase as more people adopt the internet medium. Display means to see, not to do. So, you have to grow the internet population and that is the job of the government and the entrepreneurs.
I have not met a single entrepreneur who is interested in making a dedicated sport website or dedicated women website in India. It might be because these websites don’t attract enough people and advertisers. But the entrepreneurs fail to understand that if you don’t create it, you can’t grow the audience. Orkut attracts 17 million unique visitors in India because they found a niche that people want. BigAdda and Ibibo have the biggest de-growth in the last four years because the Facebook and Orkut combination has eaten up all their lunch and dinner.
Which is the last finance vertical that you have heard of do well on the internet? MoneyControl does it because they own a TV channel, but apart from that there is nobody creating an online finance vertical today. Similarly, there is no medical vertical in India today. There is also no good car site in the country. Somewhere this is also because of the Digital Tsunami. Entrepreneurs say that there are 500 million users on mobile, but the reality is that only two million people access GPRS (internet) on mobile. Most of the 500 million are people who live below the poverty line for the mobile business.
How can the government help in increasing the internet penetration in the country?
The more the government is out of the business, the better, because they mess up everything. They simply do not know how to deregulate. MTNL and BSNL have got the copper in everybody’s home but they don’t know how to deliver broadband. The first thing the government should do is to make broadband free, because the traffic that will be created through this will be much more than the electric pulse that they charge on today. Bandwidth has become like free air today. If broadband is provided free, there will be a huge economy that will evolve around that. IRCTC’s (Indian Railways’ online ticket booking site) bookings will become triple if broadband is made free.
If broadband is provided free by the government, what will happen to the private telecom operators, as the call rate has already become negligible in the country?
Well, in this case, they (the private telecom operators) will have to find out something else. See, India gives free electricity to farmers so that they can farm their lands well. But if you start charging them for the electricity, farming in India will be hampered. Even operators know that you can’t hurt the backbone and the backbone here is voice and not bandwidth.
For instance, if GPRS is made free, the number of mobile internet users will rise from the current 2 million to 20 million and with that, the mobile VAS revenue which is linked with so much to GPRS, will also increase and therefore operators will get much more money. The sachet needs to come in the form of bandwidth. The fact is Hindustan Unilever doesn’t make money on its (shampoo) sachet. It is almost like the free sample you are giving to the consumer so that they get addicted to buy the bottle.
I think mobile internet is going to be the place where the real explosion is going to happen. The combination of internet and mobile will finally happen on the handset and not on the hard device like a PC. Indian houses are cramped and there is hardly any place for the PC and laptop is expensive. However, mobile phone has entered in everybody’s house. So, the combination of mobile phone, a device which is always with you, and internet, as an entertainment medium, will drive the growth of internet in India. The sooner the operators realise it, the sooner will be the nirvana.
What’s next? Is there another new idea in the pipeline?
We are an incubator. We have got money and we incubate different ideas. We have already incubated and sold Mobile2win; are running Contests2win; and Games2win is likely to be acquired this year and I think it will be our largest acquisition so far. My call to every entrepreneur is that you choose a brand owner in the country and I will make you present to him in less than 72 hours. We know all the brand owners in the country and we know the country well. I think we are in a business that will come out in different formats without sticking to one.
Recently, ecommerce has attracted the interests of a number of entrepreneurs. What do you feel about this trend?
I feel it is going to be very tough. India has a hand economy and all the exchanges are done through hands and everything is physical. Tickets have succeeded as an ecommerce category. IRCTC evolved because people do not want to stand in a queue at the station and wait for the ticket and hence go to IRCTC. But in other categories, you get the delivery through a phone call. For example, if I need a whisky bottle at night in Mumbai, I have the number of the guy who will come and deliver the whisky in my house. But in Manhattan, the retailer will laugh at you if you ask him to deliver at home.
There needs to be a reason for ecommerce. In India, it is a crazy co-existence where the richer people live with the poorest of the people in square inches of distance. I think India is the only country where McDonald’s has a home delivery business. So, I am not sure whether an ecommerce initiative will be hugely successful in India at this point of time. Basically, the number of 40 million internet users has to grow and after that everything will grow.
We have noticed that whenever we do a story about your companies, a certain kind of people become hyperactive in our comment section. Have you also noticed such things? Why do you think it happens?
An interesting thing about this country is that we are allergic to failure. From our parents to grandparents, we have been told to do well in school and try to top the class. Our mentality is predominantly to ‘become a government servant’. I don’t come across people who say I tried three things, out of which two failed and I am happy about that. This mentality that you don’t want to fail is the biggest curse of this country. So, in India one must learn to encourage failure. If you see America, that land has been created out of trial and error. There is no ethnicity in USA. Everything that the US has now, got failed in it before it was successfully created again.
A lot of comments that I have come across on your site come from anonymous people. Nobody wants to identify themselves and this is the biggest kind of failure and inferiority complex. Anybody who can’t identify himself on a public blog is not worthy to be printed. I have no problem with whatever you are saying, if you say it openly.
We have been a finger-pointing country. If you read the newspapers, you will always find what wrong things the government has done so far. There will never be an article hailing the government’s achievements. We are a country that always gets high on other people’s mistakes.
One should have respect towards the person at whom the question is pointed and before asking questions the questioner should show what he or she has achieved so far. It should not be like interviewing somebody wearing a Burqa because you might ask an uncomfortable question and get away unidentified.
What would be your advice to internet entrepreneurs?
This is a very complex business and industry to be in. Of late, I have met a number of VCs who have developed an allergy towards consumer internet business because exits are not being visible. So, I think the internet really needs to first perform before it starts getting investments again. Moreover, one should not think that this is a get-rich business. Rather this is a get blood pressure business. Finally, one should not think that funding is going to be easy here. It is not because we are not trying enough but because it is so tough. I go to a lot of IIMs and IITs where young people want to become an entrepreneur. But entrepreneurship is not like a pill that you consume and you become one. Doing business is not everybody’s cup of tea because you might have to face a situation where you are not given any salary for nine months.