On August 22, Media.net, a leading player in the global advertising-technology sector, announced its acquisition by a Chinese Consortium from founder and CEO Divyank Turakhia’s Starbuster TMT Investments in an all-cash transaction valued around $900 million. Mumbai-raised Divyank, and his elder brother Bhavin co-founded their first company Directi in 1998, and since then they have founded and exited several tech-based startups together or in their individual capacities. However, despite being bullish on India, the country comprises a small part of the Turakhia brothers’ investment pie. Divyank Turakhia, who will continue as CEO of Media.net even after the acquisition, speaks to Pranav Mukul about the plans for India and the advertising technology industry. Excerpts:
How do you look at the advertising tech market in India, and do you have any plans to enter it?
Media.net is not in India at all. As of right now, we make zero dollars from India. We make 90 per cent of our revenue from the US, 5 per cent from the UK and Canada, and 5 per cent from rest of the world. We basically do not make any money in India, and we don’t have any India-specific plans. The reason for that is not because India won’t be a big market. It will be a massive market in the future, but we’re not there yet as we still have a few more years to go before it gets to the size, where we would want to prioritise it. Every company has a different strategy. Some people have a first mover’s strategy, people have tried that and while some have succeeded, some have failed. Our strategy is going to be to wait till the market matures. Every year we take a look at what’s happening and decide where do we put our resources. Whether we put our resources in the UK, or in India, or in China, which is about 40 per cent a bigger market than India. This logical question needs to asked at different points in time.
Do you have a timeline in mind to enter India?
We don’t even have a timeline. We look at it every year whether we want to be in it, and I know that for the next twelve months we are not going to be in India, and after twelve months, we’ll again take a review to see if it makes sense for us to enter India. But we want to be flexible with that, because suddenly if we see India is growing faster than our expectations, then we might want to enter it faster. For now, basically it’s taking longer than we expected it to grow, and it might be another two to three years before we think about entering India.
Are you also focussing on your other businesses in India?
I’m not based out of India, I’m a resident of Dubai and I’m between Dubai and the markets we’re working with right now, and currently, most of our businesses are in the US. As soon as we start growing our European operations sometime this year, I’ll start spending time between Dubai and Europe, and as we grow in China, I’ll spend time between Dubai and China. Bhavin is not an Indian resident either, but he started spending a lot more time in India recently because of two India specific startups that we’ve focussed on. One is called Ringo, which is in communication business, and the other one is called Zeta, which is in payment business. Both of them have a lot of India focus. Bhavin believes very strongly that the market for Ringo and Zeta makes sense for India. And that’s why he’s spending a lot more time in India.
Does India as a country find a place in your investments, especially with the proceeds coming in from the Media.net sale?
Media.net is owned by Starbuster TMT Investments, which is a fund that is owned by me. So the way the funds have flown is from the Chinese consortium to Starbuster TMT Investments to me, and I will put them into globally diversified funds, which is everybody who runs various large funds, which include public market investments, bond investments. So we’re a global allocation fund and we invest everywhere. As far as the allocation for India is concerned, at this time we are not investing in India except for our own two startups — Ringo and Zeta. But in comparison too, it’s not a huge amount of money. Zeta has somewhere between 150-200 people working on it, and Ringo as around 50 people.
Any plans to scale these two startups?
There are huge plans to scale them up. Bhavin’s scaling them every day, that’s what he’s focused on. We’re spending time, energy and money to scale them up, but the amount of money needed to scale them is logical, and we think of aspects such as how much sense does it make to invest, how we see the market playing out before we basically increase the spend rate. Every business that we’ve built has eventually become large, and we hope Zeta and Ringo will also become large one day, and we will invest in them accordingly in the long term.
What is your outlook for the advertising tech industry?
Ad-tech is a massive industry today, and generates somewhere between $150 billion to $200 billion a year globally, and even though it is this large and fast-growing, there is a lot of work that is left to be done in the industry. It’s very complex, and very fragmented. Online advertising is not easy for people to understand, because of the complexities and the number of vendors involved. I think it will get simplified, and as thing gets simplified there will be consolidation in the marketplace, or there will be many companies that will shut down because they have not been able to get to the scale that you need to.