Miten Sampat is Chief Strategy Officer at Times Internet chats with Amit Somani, Managing Partner Prime Venture Partners.
In this conversation, they explore the opportunities on Future internet landscape
Listen to the podcast to learn about
1:15 - Times internet & Times Bridge
7:45 - People reading e-papers in the age of apps
11:43 - Building a viable ad supported business
14:08 - Truecaller & the toothbrush test
17:40 - India as a unique market when it comes to regional content consumption
20:00 - New business opportunities targeting the change in content consumption
22:03 - India first perspective online communities as a large opportunity
26:00 - How to think about exits
Read the full transcript below
Amit Somani 0:22
Welcome everyone, to the Prime Venture Partners Podcast. Today, I’m delighted to have with us Miten Sampat, Chief Strategy Officer at Times Internet. Welcome to the show, Miten.
Miten Sampat 0:33
Amit, thank you so much. I’m a big fan of you and Prime Ventures so very happy to be here.
Amit Somani 0:39
Thanks, Miten for those nice words. Hey, Miten like me, a lot of people have questions about what Times Internet is, what Times Bridge is. Of course, everybody knows the Times Group. Many of us, you know, grew up reading The Times of India and still do and ET and what have you. Can you just put things in perspective about the internet part of Times Group and your role there.
Miten Sampat 1:00
Absolutely, so Times Internet is the internet division of everything across the Times Group. It was started in 1999. So it’s a good 20 plus year old company. And it was started right at the peak of the dot com excitement. Basically, it is the company that houses all of the digital products across the group. And, you know, it’s obviously had a long journey, the initial years were about internet classifieds. And then more recently, you know, products across different categories. So that’s what Times Internet is. And you know, we today reach about 500 million monthly active users, which, you know, we’ll get into in a little bit. And our role in Times Internet is to really think about, you know, the future internet landscape, and then sort of build products to sort of win in that future internet landscape. And the benefits that we derived from being a part of the Times group is that, you know, we have, as you said, Amit a number of interesting products that consumers across India have a fair degree of a trusted relationship with and then we can use that as a strong bootstrap to build companies on top. Times Bridge, on the other hand, is something that Times Internet incubated and started and then we spun it off. A thesis that we had around the 2012, 2013, 2014 time frame was that, you know, we often hear the term the Google of India as Google. And the thesis we had at that point was that the X of India will be x in many categories. So at that point, we said, should we go off and start building a franchise to enable some of these companies as they build in India in categories that we don’t want to compete directly? So that’s how that started. And now it focuses on global companies. Where India as a top three market. So that’s the We Are The Internet division. And then obviously, there are several sub pieces which I guess we’ll get to talk about.
Amit Somani 2:16
Sounds great Miten that is very, very helpful. So let’s get sort of right into it. So what is the nature of the various businesses that you just highlighted? You guys are in news, entertainment, gaming, ecommerce, etc. and more importantly, how has consumer behavior changed in the last couple of years? And I’m not just looking at this current COVID time frame in which we are recording this. And we will drill into it later.
Miten Sampat 3:10
Yeah, absolutely. So I think we think about our company comes in four blocks. At the bottom, which cuts across everything are a set of common technology pieces, which are, which give us leverage across the board. So whether that’s a common login, whether that’s common ad tech system that runs across the board, we also operate our own cloud infrastructure, which gives us cost advantages and stuff like that. So that’s your base platform. And then there are certain services that every of our apps uses. On top, we think about our business broadly in three buckets. One is news and entertainment. So the large properties like Times of India, Navbharat Times, Economic Times, The India Times Lifestyle Network, and stuff like that, and this is where again, these are large reach drivers, almost like the DAU use cases right because people are looking for entertainment and news on a daily basis. The second category is where we play the role of an aggregator. And when you think about aggregator, you have to think about use cases. So the first use case is music. Ganna is a great example of a music aggregator. It’s a streaming service, you can listen to music from all types of, you know, labels and producers. Same thing with video, we have something called MX Player. That’s a large video OTT product. And then we have Cricbuzz, which does sports primarily, obviously, with cricket. And over time, we’ll do other things. So that’s the second bucket. And then the third bucket is marketplaces, broadly speaking, that have sort of traditionally been classified. So we’ve got MagicBricks, we’ve got Times Jobs, but then more modern things as well, which is ETMoney, we have Dine Out, we have Grade up, which is in education, and then a few others. And then and then attaching to all of this, you know from time to time we do new experiments. So we try new things that can leverage the reach across the board. So we’ve done some experiments in gaming, we’ve done some experiments around the edges of education, and things like that. And so that’s broadly how we think about our business. And if you look across the board, we think hard about frequency, because in a market like India, where at least historically, monetization directly from a consumer paying you something has been low, you really need frequency to build an ad supported business. And so that’s something that’s very important for us. And again, we think about the daily use cases. And so each of these things, either our daily use cases, or once in a lifetime, large use cases. And so that’s sort of how we built it. In terms of consumer trends. Since we have such diversity. There are differences that we see and nuances that we see across different companies, which are quite sort of, you know, micro in their segments, but I’ll talk a bit about the broad swath of what we’ve seen, but I joined the company about seven years ago, we had about 40 to 45 million users, the bulk of which was on the news products. Today, we have 550 million monthly active users, about seven years in. And so if you look at the compounding growth there, it’s pretty incredible. But one key moment for us was I guess two big underlying themes that really helped us. One is the growth of smartphones and everyone sort of, you know, the hundred dollar smartphone in everyone’s pocket. That’s a very important trend. And then JIO, when it launched, it had a massive catalyst effect on basically unlocking consumer demand from a consumption of content and consumption of internet products perspective. So these two things have been massive. And we continue to ride those. And I think we’re ahead of our plans that we had made two or three years ago on region engagement. So that’s something that surely helped us and you know, we think this is again, a long, long cycle of growth, which will continue to play out for the next 3, 4, 5 years. Let me pause there. I know I’ve given a long answer.
Amit Somani 6:52
No, that’s great. So let me drill down into the news bit, a little. And so just like you said, there was the kind of WhatsApp moment for the internet or the smartphone moment or the, you know, mobile internet cost moment through JIO. Are we at a news going digital moment, thanks to COVID or just the cumulative impact of everything, are we going to get to a point where, you know, India’s probably the only market where print has been growing right over all aggregators, even beyond the time group for forever, whereas almost everywhere else in the world It started declining over the last 10-15 years. So do you think that we are at a point now, that rate of pace of change has been accelerated? And just thoughts about just the news market, I guess.
Miten Sampat 7:35
Yeah. So I think Amit news is a very interesting place right now. And I think if you think about the macro, there are a few things that are happening. One is a flight to trust and quality. And I think that’s a fundamental sort of change, you know, from the election of Donald Trump through now, I think what we’ve seen is, you know, the whole filter bubble phenomenon that we saw on social media that’s become a significant, you know, data point where, you know, the whole premise of the Internet has been anybody can be a publisher, anybody who has a voice can reach an audience. And that’s, you know, that’s amazing. And that’s what enables a lot of what you and me are doing right now. There’s a lot of that, which obviously continues, but for certain key critical things, you will want to wait for an authoritative outlet, whatever, you know, outlet you trust. So that’s a big macro. And I think because of that, there’s one shift, which I can forecast is that there’s going to be an increasing number of people who will be willing to pay for digital news. So things are slowly going behind a paywall. And I think people are finding it worth their money to pay for news, whether that’s digital or physical. We’ll get to that but I think there’s one shift that that happens. When it comes to your question on whether this is the moment where the permanent shift from print to digital happens. I think it’s still tough to tell. I think that what we noticed is a couple of very interesting developments. You know, while the apps for all of these products have been out there, people still want the E-paper. And so in fact, there are massive groups that are going on WhatsApp and various other places where people are sharing today’s newspaper. Now, you would have wondered that, oh, listen, if you wanted the news, you could have just gone to the Times of India app or the Economic Times app or that, or The Indian Express app, or, you know, The Hindu app. Those apps are available, and you’re getting it digitally. Why are you getting the e-paper? Why don’t you just go to the app, right? And that’s a very counterintuitive thing. So what that suggests is a couple of things. One people love, you know, the curation and people love, still love the format. And so I think that the need for this kind of product continues to persist. And it’s very difficult to predict when it kind of dies off, whether perhaps it’s an age thing, you know, the average age of newspaper readers, the physical newspaper readers is obviously higher than the average digital news readers. So we were very surprised by this massive need for people to get the e-paper. That is something we’re still analyzing to be honest.
Amit Somani 10:14
Very fascinating. Yeah, I mean age and demographic was one that clearly made to, to came to mind. But I can totally understand this notion of, you know, curation trust quality as being big factors as well. I want to double click on another thing you said, ads, no pun intended. It’s been very hard. Like even we as VCs, have often shied away from businesses whose primary business model is just advertising. However, I used to be back at Google 10 years ago, and I remember when we hit a 100 million dollars in annual revenue, about 2009 timeframe, but now just between you guys Google and Facebook, I mean, my whatever is publicly available. I think you guys are doing over, you know, $3 billion, maybe three and a half billion dollars, just on the digital side. I’m not even counting The Times of India group. So what is your sense about building for new age entrepreneurs and ad supported business as the primary business model? Do you think that is enough juice there, or it’ll just get consolidated at the top with the likes of the big three, so to speak?
Miten Sampat 11:17
So, Amit since you’re in Google, you know this very intimately. If you have to be in an ad supported business, ultimately, you’re in the performance ad business. So when people come to your platform, as advertisers, they will measure you on the same yardstick, as they would measure their ad spend on a Google or a Times or a Facebook or what have you. So as much as it is an engagement product building exercise, as they say, I mean, you can only build a interesting ad supported business, if you have 50 or 100 million monthly active users, right, that scale, you know, it would start to sort of make an impact and kind of be real, but it’s not just that I think you’ll have to develop a performance advertising system which works. And that is a very hard technical challenge, something that, you know, Google, Facebook, Times others Byte Dance, there are lots of companies, Amazon, constantly keep improving. And there is no end state of that saying we’re done now. We’ve made we’ve invested X amount of dollars, or we’ve licensed XYZ from ABC Company. There’s no such end state there so it’s a large investment, and you have to be, you’re competing with the best in the world. So from my perspective, ad supported businesses would only be viable if you can project a scenario where at least you get to 100 million MAUs, or 200 million MAUs. If you don’t have that kind of scale potential in what you’re building, then I think you will not build a meaningful revenue generating and let alone profitable company.
Amit Somani 12:50
So very interesting, right. So the question is, you know, to get to 50 million or 100 million actives, it obviously has to be, perhaps solely on the back of organic acquisition. You can’t really use ads and do Ads arbitrage to get this.
Miten Sampat 13:04
No, you can’t, you cannot try. Hey, listen, I’m going to spend 50 cents on this. And I’m going to make 150 on the other side. No, there should be a tremendous amount of organic pull to the product.
Amit Somani 13:12
Yeah, absolutely. And I think that is even for early stage, that’s one of the metrics we look for, even for non-content or ad supported businesses, which is that if you have organic traction, that gives you a lot more leeway in terms of ads as a possible business model. But if you have no organic traction, and you’re thinking that someday when I get to 50 million 100 million users, it’s gonna be a long run unless you’re a money raising machine.
Miten Sampat 13:37
Yeah, I’d love to take an example here, which will hopefully enlighten the audience. So Truecaller is a great example of an ad supported business. I know now, they’re also doing subscriptions and stuff like that and they are adding FinTech but they’re a great example of a business, which is a utility product. It’s a daily use case multiple times a day in fact, and it has tremendous organic reach and it has a large, strong virality factor because whoever uses it tells their friends about it. And as you use the product, it keeps getting better. So it has this great set of attributes where network effects keep building, you know, there’s generativity, which is the more I use the product, the more interesting and more valuable it gets. And it has massive reach across the board, where it can actually build an ad supported business. And over time, of course, they perfected and they developed their sort of ad tech stack, to be competitive, and so on and so forth. And so they’ve gotten to this point, so, you know, if I was looking for ad supported business models, I would think about things like Truecaller. I mean, we traditionally just think about, you know, content and media, or social media, but there are other things which could be ad supported as well.
Amit Somani 14:47
Absolutely. So, Larry Page, you know, the founder of Google used to have this thing, at least I’ve heard it attributed to him, called the toothbrush test, saying, you know, whatever you’ve got, is it something that people need at least twice A day, if not more, if you don’t, it’s highly unlikely for it to become a large daily use case and therefore an organic type of business. If you keep pulling people back, it’s going to be a little bit more of a challenge.
Miten Sampat 15:12
It’s funny, you mentioned that Amit because that is exactly the term I would use to describe these things. And in fact, you know, obviously attributing it to Larry Page, because it is the toothbrush test, when we ask this question, we asked us this thing, pass the toothbrush test, because it’s a great framework. It gives you a mental model, and you can instantly say yes or no, there’s no ambiguity about it.
Amit Somani 15:32
Absolutely. So switching gears a little bit into other parts of the content business. I know you have a lot of exposure to content, of course, you’ve got MX Player, you’ve got gaming businesses, perhaps I think you guys have Ganna as well. How about entertainment as a category? What behavior changes have you seen? What adoption levels have you seen?
Miten Sampat 15:51
I think the entertainment business has been fascinating. For ourselves we have, broadly three main areas when we think about entertainment, you hit the nail on the head. You’ve got music as a modality, it’s again, it’s a daily use case people, people who love music, consume it multiple times a day, you have video. And that’s where we did a pretty ambitious and gutsy move on MX, which we’re very excited about now. I’ll talk about that. And then the third category is on general news. There’s a lot of ongoing entertainment related content, whether that’s Bollywood, Hollywood, and general celebrity kind of content. So I think what we’ve seen over the last couple of years is, you know, there’s a tremendous amount of appetite across the market in India, when it comes to sort of these products. I think we’ve always felt like, let’s take the music as an example. At one point, our goal was Ganna should get to 100 million MAU that would be amazing. And, you know, this past year, we’ve blown past that by a huge factor. Now, Ganna has 150 million MAU and you know, we think that the market now has got a 150 to 200 million MAU opportunity. We think Ganna will get to 300 million MAU easily if we’re if we’re sort of a relevant product that continues to sort of add value. And then let’s if you go a little bit deeper into that, right, so what we’re observing in something like Ganna is, India is a very unique market in terms of regional content consumption, as opposed to some of the others. And there’s also a lot of crossover between regional content so for example, in over the last 18 odd months, Punjabi music has really taken off, and not Punjabi movie music, but really Punjabi music. Similarly, you have other regional content, that’s, that’s becoming very strong, you know, as much as we would think that the top 50 or top hundred songs are gonna be the, you know, the billboard 50, or the, you know, the top 50 in India that you hear about on radio channels. That’s not really the case. There’s a massive long tail of consumption. And there’s a massive long tail of interest that people have. And so this is where, you know, the role of online streaming service becomes all the more relevant because this is the best way you could do personalization. You can have a large library and again, if it becomes a large scale, so you know 150-200 million MAU product, going back to the previous point on ad supported versus subscription. You know, you can actually have a meaningful business where you have a revenue base that makes sense. The biggest one I’d say in terms of surprises and positive surprises has been MX Player. So, you know, when we acquired MX Player, it was a video utility app, something that people would use as an offline player. As you know, in India, there’s still a very large behavior of people sharing files with each other, whether that’s through Bluetooth or WhatsApp, or, or even physically, you know, transferring SD cards and memory cards and stuff, right. And so that’s what MX Player was. And when we acquired it, we said, look, the organic reach is so big. It had consistently been a top 10 app and the App Store purely organically can we make this an entertainment super app if I could use that word. That wasn’t really the first thing we were thinking. The first thing we’re thinking is will people consume online video. So we started with that. And then we added music so now you can consume the Ganna experience inside MX Player. And now we’ve added casual games as well. So MX is becoming a juggernaut of a product. And it’s had a very positive moment with COVID. Right. People have a lot of time on their hands. And so the consumption trend there is just phenomenal. Let me stop there. Not go on too much. And then we can double take in any specific area from here.
Amit Somani 19:23
Yeah, so much like news. I wanted to again, understand, you know, even thinking about the toothbrush test talking about consumer behavior, sort of morphing, etc, that are there new behaviors, where for New Age startups, there’s opportunities to do stuff, right. So a lot of us now have been playing things like an online dictionary, or antakshari or online treasure hunts, and all these kinds of unique, interesting things. And I’m not necessarily saying there’s all daily use cases, but these are things that would otherwise have taken years to manifest. Again, thinking from the point of view of our listeners who are mostly early stage entrepreneurs, are there opportunities there, which also even at your scale are not very interesting to you. You’re not interested in something that will lead to, you know, 1 million weekly actives or whatever. But you know if that’s how they all start, and then they grow from there. So just curious about the long tail of entertainment, the long, like you talked about Punjabi music, the long tail of gaming, are there other interesting things there, because there’s enough consumer appetite now, that may still not be that meaningful yet, for the scale that Times is at are or some of the larger internet bigwigs are at.
Miten Sampat 20:27
So absolutely, so I think there are lots of things happening. And I think the way entrepreneurs, if I was out there right now, I would be thinking about these things as platforms. And these things as opportunities to build with and build on top of. So we’ll come to that. But basically, look, I think there are a few niches where we’re seeing tremendous behavior shift. So mobile gaming is definitely one of those which is going to be just as we’re talking about music and video as independent categories. I think we’ll talk about gaming broadly as an independent category. In fact, we already should be. And so what we’ve noticed is that it, so were investors in the startup called MPL Mobile Premier League. And we came in just after Sequoia Capital had invested there. MPL has basically caught on to this massive trend where, you know, they took casual games and made them competitive. And that, again, it’s one of those, once you see it, you can’t unsee it, right. It’s one of those ideas. And the kind of growth that they’re seeing is phenomenal, because it’s instantly now become a social experience, as opposed to being kind of a solitary experience. So ideas around that I think are, are going to be big. I think similarly, there’s a large trend around again, you got to think about it, saying listen I’ve got a 100, 200, 300 million users in India, who are used to consuming content through their phones. So what might they do now, which they wouldn’t have done before? So I think communities online in India, which are more designed from an India first perspective, I think are a very large opportunity because you know, one of the things people do initially when they come online is they do entertainment, but then after that they want to start engaging with their, you know, with their fellow people intellectually. Whether that’s, you know, depending on the kind of things that interests a person, it could be around entertainment, sports, it could be around education, it could be around career stuff, it could be lots of different things. So I think India specific communities don’t exist to an extent they exist on Facebook, but I think they could be an independent product, which could be large. Similarly, I think there are large opportunities around leveraging, you know, some of these platforms to do new things. Let’s say for example, using video as a medium for commerce. And again, you’re seeing a few startups doing some early stuff. Bulbul is a good example. Simsim is another example. But again, I think that’s sort of the first wave. And again, there will be lots of new things that happen over time, which I think are gonna be quite exciting. And I think the last thing which I feel is about to get reinvented again, in this kind of new world, is how people think about work, itself. And again, this is a bit of a Covid related acceleration as well, which is, can I be remote and contribute to a set of things which I would have traditionally thought is not possible. And I think a lot of that becomes kind of front and center now. So a company that enables the discovery of this kind of work as well as discovery of this kind of workforce, all of a sudden, I think there’s going to be a large sort of opportunity that I think gets created now,
Amit Somani 23:26
Great, actually wanted to ask a quick question about do you guys think about per capita income, and that indexation to news, entertainment, and whatever follows next, right commerce and other sort of things in the Maslow’s Hierarchy? And if so, do you have any kind of rules of thumb that you guys are looking at? The ecommerce guys, for example, think about $4,000 per capita GDP as a big trigger point basis, the learnings in China and perhaps Indonesia.
Miten Sampat 23:52
Amit we actually don’t think about that too much to be honest, because we don’t have any influence and ability to sort of change that. And this is a matter of fact kind of a thing. I think the way we think about big numbers, ultimately big scale is what kinds of decisions am I going to be able to sort of influence in the person’s life? So, a simple way to think about it is okay, Dineout. What is Dineout’s opportunity? What is Dineout’s stamp? Dineout is an eating out product, it applies for the top 10 cities and to some extent applies to the top, you know, the next 20-25 cities. Is it a 500 city product? The answer is no, because the number of restaurants in the city becomes a question, the number of people with the ability to go out and spend 1000 rupees per family per meal, that becomes a question. So we think about those things on a very specific basis. I think at a GDP level at a macro level w e haven’t found a direct correlation, specifically to our business yet, and we don’t honestly we don’t think about it like that, because I think it’s hard. It’s too generic, too macro number. So you really have to go deeper to be able to make that a more informed decision.
Amit Somani 25:02
Wonderful. So as we come around to sort of wrapping up here one year, I loved your blog at the end of 2019. Seems a long time ago. Now, where in particular, you talked about exits, some partial exits, some full exits, etc. You know, that is the magical four letter word in the Indian ecosystem that has been a miss, certainly on the venture and the investing side. So can you talk a little bit about exits and how both you think about exits and how entrepreneurs who are sort of little bit later in their journey should think about it? And if any kind of lessons learned from that phenomenal year you guys had last year?
Miten Sampat 25:35
Sure. So I think look, exits are definitely that value unlocking event that in tech, that’s kind of been the one of the ways you kind of unlock value, because obviously, we’ve been in this massive build out phase. And so companies are still not massively profitable, that they’re giving out dividends. So, you know, you have this moment where when you have these opportunities, you really think about them a lot more, as opposed to some of the people in the other in other industries. And so I think the way we think about it, and to some extent I personally think about it is that, you know, companies with a very long horizon should really be building to go public. If you have a big enough, you know, market if you have clean enough and well sort of established product market fit revenue engines are working, building in a market like India, you have a really long horizon to be able to build and, and build up a large company, but not every business fits that right. And I think there are a lot of companies who, who start obviously with that ambition, but ultimately, there are different types of challenges that come up. And so for us, what we’ve done is, you know, in cases where we know that we’re not going to be kind of a top two or top three player, we think harder about whether we should be in this business or whether we should take an exit merge it with another bigger platform, things like that. And, again, we don’t do this kind of as a forcing function on the inside because a lot of this has to happen organically, you know, as they say, the best businesses are bought and not sold. So we’re very conscious of that. But I think for us, it’s been a good run over the last couple of years where we’ve had the opportunity to sort of exit a couple of businesses to larger players, or other strategic potential buyers who’ve seen value in something that we’ve built and now feel doesn’t fit our core business. You know, as much as we thought initially it would. And I mean, I’ll give you a tangible example of this, you know, Haptik, which is a conversational AI company. You know, initially when we came into the business, as investors, we felt that there was a large opportunity to build kind of like a WeChat of India, which was conversational transaction ecosystem could really do a lot of things for you it could become your personal assistant, it could help you do a lot of online transactions. And so on and so forth, that was where we started. And we made a lot of progress when it came to that in terms of technology, but the consumer adoption wasn’t it wasn’t anywhere close to what our expectations were. And so as that business went from being kind of a B2C business to a B2B business, we had a conversation amongst ourselves and also with the entrepreneurs and said, look, we’ll continue to be investors but the B2B Businesses is not a long term play for us. And so that’s when we found, you know, Reliance JIO, had a certain ambition with the B2B side of that business and exited that business as Times Internet, and the entrepreneurs continue to run it. So I think we are opportunistic about these things. I think we’re open minded about these things. And I think that’s how you have to approach it as an entrepreneur, which is don’t build to sell, build to build a great business. And then along the way, these kinds of opportunities, or these pivotal moments may come about where you have to kind of, you know, apply yourself and go at it. And ultimately, that’s one of the only ways your investors are also going to make money. So I think and of course, founders as well, I mean, this is not just an investor, even founders do unlock value at these events. So I know I think India is not acquisitive enough. We haven’t really had any tech IPOs in a very long time. So I’m hoping that changes. In fact, I was hoping that 2020 would be the year some of these would happen. But now with COVID. Perhaps all of that gets pushed out by 12 to 18, maybe 24 months. Let’s see.
Amit Somani 28:58
Thanks a lot Miten. This has been really fascinating, wide ranging conversation from news content, ads and so forth. I’ve certainly got a lot of scribbles and notes here. Thank you again for being on the podcast. Ladies and gentlemen, that is Miten from Times Internet.
Miten Sampat 29:14
Thank you so much.
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