Building Large Global Businesses From Small Indian Cities with Rohith Bhat Founder & CEO 99Games

Rohith Bhat, Founder & CEO 99Games chats with Amit Somani, Managing Partner Prime Venture Partners.

Rohith is a parallel entrepreneur who started three companies: Robosoft Technologies, Global Delight and 99Games. Robosoft Technologies started in 1996 and had Apple Inc. as the first customer. Robosoft was acquired by TechnoPro of Japan in 2021 for $100m+. Rohith is now focussing all of his attention towards growing 99Games profitably towards scale.

Listen to the podcast to learn about

01:50 - Starting the Entrepreneurial Journey with Apple

05:00 - New Opportunities: Metaverse Gaming + NFTs

08:00 - Building a Large B2B business from Udupi

15:30 - The Game Changer: Democratisation of Distribution

21:00 - The Process of Selling Your Startup Successfully

29:00 - Monetisation of Gaming Businesses

Read the complete transcript below

Amit Somani 00:52

Welcome to the ‎Prime Venture Partners Podcast. I’m your host, Amit Somani. I’m delighted to have with us today, Rohith Bhat, co-founder and CEO of Robosoft, 99 Games, and then otherwise, both serial and parallel entrepreneur. Welcome to the show, Rohith.

Rohith Bhat 01:08

Thank you, Amit.

Amit Somani 01:10

Rohith, I've known you for many years and you have a fascinating story. Having started a global B2C company out of Udupi, and we are going to explore that a lot, but the first story I remember about you is that you were going to WWDC, the Apple developer conference from the late '90s. So maybe you can talk to us a little bit about the early days of WWDC and your founding of Robosoft as a company.

Rohith Bhat 01:40

Yeah. So I think maybe I can quickly share some details. Robosoft was started with the intent of building world-class products for its customer on the Apple Mac platform. That's how our journey started up. This was in '96. And my experience before that was building products. I was an engineer and I was developing word processor for Japanese language on the Apple Mac platform. I was working in Japan.

I came back to India and I figured, "Okay, what can I do?" And I thought, I know Apple Mac programming extremely well, and maybe I should start off. And this was '96 and Apple was not a big company that it is now. And I thought it's still a $6 billion company, still has a cultish following, and if I do good work, maybe who knows, I might be able to create a niche for myself.

Amit Somani 02:35

Really, really fascinating. I can't even imagine it. Now, it's a couple of trillion dollars in market cap. What was the so-called cult following like and what were some of these early WWDC experiences for you?

Rohith Bhat 02:50

Yeah, I think Apple was always a very, very cultivation of brand, it always had that. And during this whole '96 period when Apple was almost being written off as a dead company, there was this group called Apple evangelist, which was promoted by Guy Kawasaki. He was brought in to give that cult online presence. And he built that, and it used to be pretty crazy because whatever Apple would do newly in that time and day, there was this whole cult that would go and support it, be it the first time that was Mac was brought out, be it the early Apple retail stores.

So I think it is ultimately the community that helped Apple survive those very trying years. And I got a chance to see all of it firsthand when I was visiting WWDC because that was the congregation of the most cultish Apple fans in the world. And my first one was in 1997, that was my first early developer conference of Apple.

Amit Somani 04:00

I can't resist asking you since you're also in the gaming world, what are some of the other companies you've come across, maybe more in recent times that have that cultish following? I've heard that Unity gaming might have something like that. And of course, there are a bunch of developer-oriented companies, but are there any that you have seen or been inspired by in recent times, last four, five years?

Rohith Bhat 04:30

I think probably one of the things is the following that Tesla has as a company and Elon Musk in particular, has it. I don't see anybody else having anything close to that kind of a following , even in the recent times. That was something, a different level altogether.

Amit Somani 04:40

Absolutely. Let me switch gears a little bit and talk about, if you are an engineer developer today like you were on the Mac back then and you were to be starting a new company, what are some areas that you think are breaking out which would be, at the edge, I'm not saying they're becoming mainstream. In '96, like you said, Apple was a $6 billion company and it seems unbelievable now, but what are some new interesting areas other than EVs, that you think are interesting and breaking edge?

Rohith Bhat 05:10

I think Metaverse gaming. Very simple, again, I am heavily influenced by the gaming bent into this whole thing, but Metaverse-based gaming and powered by NFT. If I'm a developer, I would just look at that space very, very seriously.

Amit Somani 05:35

Help our listeners just break that down into maybe one or two examples of what the Metaverse would look like or gaming. Just some examples of what could be interesting ideas there for people who are less familiar with it.

Rohith Bhat 05:50

Yeah. So I mean, I think whoever has seen a game like Roblox or played in games like Fortnite, have a pretty good idea about it, what Metaverse is. If not, they should probably look at some of the videos on these or better, go and hang out with your nephew, your niece, or your friend who spends a lot of time there.

My first brush with this whole thing was with Roblox, my daughter was playing nonstop for a couple of years. And it did not hit me back then. But the more I think about it nowadays, I think that's going to be the future of gaming because when you marry Metaverse with cultural sensitivities of different cultures, I think that's where the next communities are going to hang around.

Amit Somani 06:38

Wonderful. Let's talk a little bit now both about 99 Games and Robosoft. And congratulations on the recent exit for your company. Can you talk to us about some of the highlights and some of the journey lessons from building both of those brands and those companies?

Rohith Bhat 06:55

Yeah. For me, they are two different brands and two different businesses. One, Robosoft was a B2B business and 99Games was more of a B2C business. And the inspiration for 99Games definitely came from the services business, the game services business of Robosoft. As you know, as a company, we are now based out of Karnataka, a very strong presence in Udupi, which is a tier-three or a tier-four town in India. And that decision was a little bit difficult to take.

And I decided to move my company from Bombay to Udupi back in '98. And one of the things that people used to always say is that, "You cannot do this, or you cannot do that in Udupi." And first they said, "You can't build a world-class company in Udupi." And we started getting a lot of world-class customers; Hewlett Packard, Apple you name it. We were working with them. And then they said, "Look, you can't raise funding. You can't sit in Udupi and raise funding for your company." And we did that. Then they said, "You can't scale your business." And we scaled it also. "You can't find talent." I think we've found enough to give ourselves a 100 million plus exit. At the end of it, some people were also telling us, "Look, you've scaled, but you'll never be able to get an exit."

And we exited. And then when we exited, we exited to a Japanese company, a couple of billion dollar, top-line Japanese company, and one of the toughest sales probably. And it is even more nice to know that we are able to do this whole entire sales process online. We could do that during the whole COVID timeframe. So I think some wonderful memories, and it is something that I keep telling people, "Focus and persevere." These are the general two mantras of business. If you focus and persevere, I think you'll be able to make memorable exits.

Amit Somani 08:55

Lots of followup questions, Rohith. You've beautifully laid out the script for my podcast questions. So let's look at the three or four myths that people said you couldn't do and you were able to do. And let's try to see if we can pull out some lessons. People said you can't get funding, you can't get scaling, you can't get talent. You're in an obscured location. Let's look at each of these in turn. So how would you recommend somebody who's sitting in, I don't know, Jaipur or Bhavnagar, of Hooghly to be able to raise funding today?

Rohith Bhat 09:30

I've always believed it and I believe it now, if you're a very strong company with two or three very strong founders in your company, and if you have some really good idea and you focus on it, show early traction, it is more easier than ever to raise capital. Geographies are irrelevant, especially after COVID. And especially if you're in a business which really doesn't require a fit on the street kind of things. It's difficult to build a food delivery company or a grocery delivery company sitting in Udupi. You need to be there in Bangalore. But if there's a virtual business like what we do in 99games or if it's a services business, then there is absolutely no reason why you cannot build it from a tier-two, tier-three location. Absolutely not.

Amit Somani 10:20

Great. How about scaling it? You said a lot of people said, "Hey, you can't scale this." So what were some of the lessons in being able to scale the business?

Rohith Bhat 10:30

Yes. So scaling a business in a city is a difficult ball game. And then in a tier-two, also it's a different ball game. It is just that there are two different challenges, when you're in a smaller town, you are more worried about what the people in the town say about you. So you need to get your talent and your talent won't stay there, their families don't want you to stay there. So you need to make sure that you're housed in a beautiful location, in a very good office facility.

You have to build that local brand in those cities, which is very, very important because in Bangalore, a lot of these things don't matter in big cities. But when you're in a smaller town, I think it is very important that you keep show casing, keep talking about the work that you do. And it ultimately attracts talent. In India, talent comes to Bangalore or any other city from all these other locations, so if you want to hire a 1000 people or 2000 people team, I think Udupi probably has more than 30, 40,000 engineers gone from here. So finding a small subset, convincing them, I don't think it's going to be a problem, but you should be on a mission.

Amit Somani 11:37

How about the business part of this? So even in a B2C company, you have to do partnerships, alliances, marketing and so forth. So on the third leg of your stool, which was on talent, engineering I can still understand, you can teach people engineering. How do you teach people marketing and design, and alliances and partnerships, all of which you of course did. I know that.

Rohith Bhat 12:10

Yeah. So one of the things is, you should be ready to travel a lot. I think being in a smaller city, I think you'll probably travel twice what other people would travel because they're constantly fighting that particular bias, being in a smaller, easier level. When I want to speak to him, is he there and all those kind of things. So travel, you have to travel quite a bit for that. And not everybody needs to travel, but the people who are looking at it, they have to travel. You have to think a little bit different.

So when we built the design lab for Robosoft, we didn't try to build it in Udupi. And we built our design lab in 2013, even before the whole design became such a strong buzzword and thanks to Apple's influence on us. And the first thing that they said, "Look, guys, build a very strong design studio for yourself, because this is going to be the future for you.” We couldn't find that talent in Udupi or in Bombay. And we had to just look at people from the ad industry background, stuff like that, and take them through the whole Apple way of doing things. We had to build our design lab there.

And Robosoft still has a team of around 35 to 40 people who are looking at pure play design itself. And even when we did this recent transaction, that transaction was more smoother because we had this design pedigree in-house. And it's not just design talent, it is a design pedigree. We bring design into everything. We bring design into our office space and everything. So it helped. But you have to think a little bit differently.

Amit Somani 13:50

Yeah. Sergey Brin, the co-founder of Google used to often say that the biggest innovations happen because of constraints. If you're completely unconstrained, so to speak, unlimited capital, unlimited talent, unlimited whatever, you are going to have trouble innovating. And I can totally see that in your context, including this. So where was the design studio for you guys, where's it based?

Rohith Bhat 14:20

It was in Bombay, in Mumbai. And just to make it easy for me, we built the studio very close to the domestic airport. So whenever I used to travel, I used to get out of the airport, I could just walk into the office.

Amit Somani 14:33

Makes sense. I read this interesting quote by you, or at least it was attributed to you, which says that, "An idea is not a product, a product is not a business, and a business is not a scalable business." And that you guys learned this the hard way. And especially when you're experimenting a lot, I can associate with it, but love for you to elaborate on not that every idea is going to be a great iconic company.

Rohith Bhat 15:00

Yeah. I think we learned that over and over again, and we learned it the hard way. So probably the genesis of 99Games was a very simple idea. We were always thinking that we are building all these games and our customers were winning awards for it, Apple awards, it was winning the design awards. It was winning all kinds of awards.

And at some point in time we thought, "Okay, we are building B2C products, but we don't sell them ourselves. So how difficult would it be to build something on our own and then make it available out there?" And what inspired us was, when the app store was launched, because it democratized the distribution. If you were to distribute your software, you need to go to all these distributors and it was a crazy story back then.

And when we saw the app store and when we saw the traction that our customers were getting on the app store, we said, "Look, I don't think there's a better time than this to go direct." That was our inspiration. And we thought, "Okay, how difficult can it be? We are really good at building stuff. So all we need to do is build and put it out there." But yeah, I think that's when we started learning some very, very difficult and hard lessons.

Amit Somani 16:17

Great. Let's use this to segue into one of the things that I know you are very passionate about and you would like to inspire other entrepreneurs to do, which is to build great B2C companies out of India. There's a lot of amazing B2B companies that are being built and the productization of SaaS globally and so forth.

And we as Prime Ventures invest in a lot of that, but now increasingly there's an opportunity to build B2C companies. So maybe if you can talk to us a little bit about what will it take to build great B2C companies out of India, and how do you overcome some of the barriers, like being away from the market, being away from the customer and so forth?

Rohith Bhat 17:00

Yeah. So some amount of background in building the products for those markets will definitely be helpful. We had that background when we started these product entities. It was again, people from Robosoft came out and started this company. It's just that this company got incubated by Robosoft initially until we went into a second round of funding. And we had all those knowhow of building stuff. But what was difficult for us after some time was, how do you get the press to speak about you?

You need the local press and while we could build great stuff, how do you get the local press in US and all to write about you? That's when we started attending all the conferences out there, the Mac worlds, the demo day, the techcrunch, all these kind of things we used to attend and try to pitch to the folks out there. We used to be on product hunt on one of the very early companies who started promoting our product, because we had to be on the channel and on the communities, which our competitors in those geographies would be active on.

And that is what you need to look at, what are all these competition doing and what channels are they in? How are they acquiring users? How are they reaching out to users? How are they building communities? So it's a lot of hard work, but nothing that you cannot do with dedication and looking at stuff, and seeing that, "Okay, can it be done? Can it be done?" So I think if you keep persevering on it for a long time, you'll eventually crack it.

Amit Somani 18:37

Great. So if you can think about some specific examples, and I'm particularly curious about discovering the customer need and the market opportunity and validating it, right? These are some of the harder parts. I think in general, I feel like we've begun to build a very good engineering and product and design ethos. So once the problem and the opportunities are identified, I feel more confident that our entrepreneurs can crack anything globally. But how do you do that discovery, both of the need and the business? Any thoughts on that or any lessons learned?

Rohith Bhat 19:15

Yeah, I think it's always about the pain points, Amit. It's always about solving a pain point. So I'll just give an example of what we did initially when Apple released the iPhone. There was no Zoom. And we built a digital Zoom. We built a camera app, which was a digital Zoom. And next, people are complaining, there's no flash. And we built a digital flash. So as Apple went on iterating their hardware, we had a product called Camera Plus. Our value proposition was simple. We'll always have additional functionalities than your built-in camera.

That itself was good enough for that product to just get up 20 million in downloads within four or five years back then. And it was pure word of mouth because it was solving a problem and people were going for it. And all we needed to do was keep listening to the problems, because it's the same issue. Whatever is accessible to the customer feedback that is accessible to a company in US, is also available to a company that is sitting in Udupi. We could do that and you could always reach out to Apple because we used to know Apple and whenever you had an issue, they would help us with those problems.

So if you listen to a problem statement and persevere it, I think you can do it. Second example in the gaming space, we built a game called Star Chef. And when we built Star Chef, it was a cooking and restaurant management game, there were no games of that category. We had to do some R&D to see what kind of games would work really well on an app store kind of a thing. So we looked at the Facebook gaming part of it, we looked at the PC gaming part of it. We did our research and R&D and then we said, "Look, there is this particular genre that is highly underserved on the Apple platform and maybe we should go and build it." So you definitely need to do your R&D, but you can do it sitting in India. You don't need to have your presence locally if you know which problems to go after.

Amit Somani 21:25

Great. Let's switch gears again and talk a little bit about your exit journey. You said that a lot of this happened during the COVID times, so it was a lot of remote stuff and so forth. So in whatever you're comfortable sharing, how did this come about, and was this a longstanding relationship or was this just a serendipitous thing that happened, maybe just a little bit about that would be helpful?

Rohith Bhat 21:53

Yeah, it was a well-planned initiative. It was the beginning of last year. I think both on our side, as well as the investors, we decided that we need to give our investors an exit from Robosoft because they have been invested since 2013. Kalaari was invested in us from 2013 and they were reaching their end of fund and all those things. And we said, "Look, I think the company is on a good momentum now. I think this is a good time to launch this process."

And for us, the best way of doing it is in engaging an investment bank. We did a bidding exercise. We invited some 20 investment bankers to pitch to us and they all did a really good job of pitching to us. We had a four-day pitching session and we invited different people. We had companies from Japan, as well as USA, the investment bankers pitching us. Because back then, digital was a pretty strong need in the market. So we knew that we would get a strong interest and the interest amongst the investment bankers were strong. We started the process some time in August last year and it took us probably two, three months to get our first set of interest coming in terms of at least a broad level term sheets.

At the end, there were two companies from the US and one from Japan, which we were finalized upon. And then it took the usual route of a month or two about figuring out the numbers and stuff like that. In our case, it was slightly different because I was exiting. I told my investors, as well as the incoming folks that, "Look, I'm not going to be in Robosoft."And we had a CEO running the business at that point in time. And he was running the company for the last few years now. And it was an easy process for us to position that.

We started a very strong interest in terms of our company performance, it was exceeding the performance based on the estimate that we had given. So when the year ended, we were slightly ahead of what our estimations were. I think it took a few months of DD. The DD process was slightly grueling. And I think we were proud that we could do that because TechnoPro was a Japanese company and Japanese companies in general are known for a high level of diligence and we ultimately did it, and we announced the deal on August 11th.

Amit Somani 24:26


Rohith Bhat 24:28

Thanks. So because TechnoPro is a publicly-traded company, we announced all the numbers, everything on the same day.

Amit Somani 24:36

Great. So I want to just double click on a couple of things. One is this woefully large number of investment bankers that you talked to, number one. Number two, in hindsight, what helped the company get a meaningful valuation like you did? So were there things like you had mentioned earlier that the design studio and the design thinking was an important part of the process and the interest and so forth. So were there a few things that made both the value and the deal to happen? So both of those would be very helpful.

Rohith Bhat 25:12

Yeah. So a couple of things that I think which really worked in our favor. One is, we had a very strong growth for the last three, four years. The growth was accelerating. We had a very strong cash flow in the business. We were generating strong cash month on month, which was growing month on month. The third thing is our client base. We have worked for some of the best brand names out there, starting with Apple as our first customer.

The apps or the games that we have built, probably have been downloaded more than one and a half billion times already. And we helped launch some of the most visible businesses out there. So we had a strong combination of engineering plus design, and that's our tagline. The Robosoft tagline was emotion, engineering and design. We were constantly propagating the same thing that, remember we’re a company that is thinking of building products that are used by millions of people, so that one thing has stayed true right from day one.

We were always very clear that we wanted to build products that will be used by millions of people. So be it in Robosoft, be it in our product entities, it was always the inspiration for us. We don't want to build a B2B app, because we used to always say that we are B2C people. B2B will always be used by very few people and we want to be here about millions of people. So some inspiration comes from Apple as well.

Amit Somani 26:42

Indeed. So if Rohith of 2021 was to advise Rohith of 2011, let alone 2001, what are overall, some of the lessons learned in your entrepreneurial journey that you would do more of, or less of, in hindsight?

Rohith Bhat 27:00

Yeah. So one of the things I would definitely think twice about doing is having multiple businesses. I started Robosoft and in between we started a company called 99Games. And there was third company called Global Delight, which was building products; apps for the photo, [00:27:00] video and audio space. Whereas, 99 Games was building products for the gaming space. And then there was Robosoft, which is a B2B business.

When each of these started scaling, it was extremely difficult for me to personally scale. It's about three different businesses and not just three businesses, they are three different DNAs altogether, because gaming DNA is very different from the services DNA and the product DNA. If there's one thing I'll tell people, "Look, be very, very careful about what you do when you diversify from a services business to something like this. You need to scale in a very different way."

And if there is one thing I would go back and do things differently, I would think a lot on those aspects. It's not that it cannot be done, but the way you need to think about doing it, should be different. Something that I would do again, I think gaming is a business that I'm excited about and it keeps changing. The flavor keeps changing. There's a macro trend every 10 years. There's a micro trend every three years. So it always keeps you on the toes. It is a fantastic combination of great engineering, creativity and data science. If you love being challenged on all three aspects, I think that is a business to be in; creativity, plus engineering, plus data science.

Amit Somani 28:40

Yeah, left brain and right brain thinking combined. One of the things in the gaming world, and I've often talked to you even as we have looked at it to invest in, is that the monetization in India has classically been very low. So you're building here, like you said, for the global market, even though the usage has now gone through the roof, thanks to the whole mobile internet and mobile data penetration.

So if you are an entrepreneur here in 2021 starting out, what would you say? Would you still say, build in India, but straightaway for the world and because of the more monetizable markets, or do you think that there are interesting opportunities emerging in India as well for monetization, not just user growth and user engagement?

Rohith Bhat 29:20

Yeah. So if you are a two, three-person company and if you are a bunch of founders who have two, three different diverse background, I would say build for India because the India story is just getting started. It's a 10-year journey and they should all have that horizon. But it is definitely starting. If you already have a larger team of 20 to 30 people, look at the world market and build your expertise, build your template for success. You can apply it to India at any point in time. That would be my advice. If you are a bunch of four, five people, look at India. Keep your burn low, learn. A gaming business is again, like a template business. Once you figure it out, you can replicate it. You can multiply very, very quickly.

Amit Somani 30:10

That brings me to my last question, which is that in gaming, there are these trends that happen. So you might get a beautiful game that goes on fire like your video Zoom experience, of course on the Mac which is not necessarily a game or utility app. And then in gaming, it might be a trend or a fad and then tapers off, and then you've got to get the next one and so forth. That model classically has not held up so well from a venture-investing point of view. So how do you think about it from an investor-hat point of view and an entrepreneur-hat point of view?

Rohith Bhat 30:44

That's my favorite question that I like to take. So in gaming, there are two kinds of games. There's one game that it's a free-to-play gaming. The business is much more predictable because that's the template that I was talking to you about, once you figure out the template, you can replicate it at different genres and in different businesses. There's a second kind of game, which is a hit-driven thing, for example, Temple Run is a hit-driven. A Subway Surfer is the hit-driven kind of game.

Angry Birds when it started out, it was a hit. When the creator created those games, they never thought that it would become as huge as it eventually became. For example, what happened to Ludo in India. So it's very difficult to predict those. And I wouldn't detect on anybody to come out with the next Temple Run or next Subway Surfers. But in the free-to-play business, it is much more predictable. Once you figure out some of the core elements in that, you can slowly start applying those learnings and try to scale your business.

So if you're an investor, you might want to look at what is it that they're actually building? What is their expertise in putting stuff out. A lot of gaming teams have this thought process that, "Once I ship, I'm done." But in gaming in the free-to-play kind, once you ship, that is when shit hits the fan. In India, there's a big perception, difference between the two. A lot of people think that once I ship stuff, it'll magically work but 99% times it doesn't.

Amit Somani 32:25

Absolutely. Like you said, it is a lot about focus and perseverance, and iteration. Lots of iteration.

Rohith Bhat 32:30

We've already seen some of the success stories. You take a look at what the folks are placing per day and they sat in India, they were able to build a game in a particular sub-genre, with the very best in the world. Ultimately they got a very strong exit. It's fully built in India, built for the world kind of a story. There is a validation there. I think it can be done. And if you look at what happened in Turkey, Turkey's gaming industry is now known to be one of the most creative countries. There's nothing stopping Indian studios from making that happen in the next three to four years in free-to-play for the world market. There are certain structural advantages that we have, which will become more and more apparent in a few years time.

Amit Somani 33:15

Fantastic, Rohith. Great talking to you, very inspiring story. Lots of lessons to be learned for the entrepreneurial ecosystem. So congratulations again and thank you for being on the Prime Venture Partners Podcast.

Rohith Bhat 33:20

Thank you, Amit. Thanks for having me.

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