Dippak Khurana, VServ: How to Build a Global Mobile Ad Network Serving over 100 Million Unique Users

In a world where we constantly shift our attention from one screen to another, it’s perhaps ironic that the smallest screen is also the most powerful one. We’re, of course, talking about your mobile phone, the comprehensive winner of the battle to be at the centre of your digital life. What started out as a device to enable talking and listening now powers gaming, banking, shopping, learning and even loving. And when users are captive, can advertising be far behind?Today, we at YourStory bring you a power-packed interview with Dippak Khurana, the CEO & co-founder of VServ.mobi, one of India’s leading mobile advertising networks. To give you a quick snapshot of VServ’s scale, they served 12 billion ad requests globally in January 2012. In this free-wheeling chat, Dippak speaks in detail about his entrepreneurial journey, the future of the mobile advertising industry and the lessons that he has learnt in the 16 years he has spent in the new media space. Read on to know more:

Dippak, tell us about yourself.

Hi! I am Dippak Khurana, CEO and Co-founder of Vserv.mobi, a leading mobile ad network company. I have spent almost 16 years in the new media space but was bitten by the entrepreneurial bug during college, when I manufactured and sold t-shirts with rock band prints. Post my graduation from the Narsee Monjee Institute, I got into the livestock business and set up a layer farm called Puja Poultry Farm. After successfully exiting it in December 1995, I moved on to the Times group and helped them launch the first online newspaper in India– TheTimesofIndia.com.

Moving from there, in April 1999, I became a part of the core team for India’s first online ad network company called Intercept Consulting. Thereafter, I moved to Yahoo! and helped launch the wireless business in the country with Hutch. At that point, I was heading Yahoo!’s business development section to build alternate revenue streams for the company; outside of online advertising. I was also part of the core team that launched India’s first SMS short code and Mono ringtone service, which eventually constituted 95% of Yahoo! India’s earnings. Globally, we were the first to roll out Yahoo! messenger and Yahoo! mail on SMS in India.

Later, I moved on to Mauj Mobile, where I worked for 6 years handling business in India as well as internationally. We launched Mobile Internet Portals for carriers such as Vodafone, Idea, BSNL, MTNL, etc. and also dealt with content licensing. As a result, I was completely exposed to the mobile internet ecosystem. I understood the growth of the mobile internet users and identified the business opportunity in the mobile advertising space leading to the inception of Vserv in December 2009.

If someone asked you to explain what Vserv.mobi is all about in three sentences, what would you say?

Originated in India, Vserv.mobi is a leading Mobile Advertising Network for App Developers, Publishers and Advertisers for the emerging markets. Since its inception in January 2010, the company has delivered In-App & WAP advertising for leading Fortune 500 brands & digital media companies, in over 200 countries. Vserv is arguably the only company in the segment that serves advertisements on both feature phones as well as smart phones on both Apps andMobileweb, across platforms such as iOS, Android, Blackberry, Symbian, WP7 and J2ME.

How did the idea for Vserv.mobi come about? How did you zero in on the name?

While working at Mauj Mobile, we saw that a number of users had started browsing the internet on their phone. The numbers rose from zero customers on the telecom operator to millions in a span of five years (2004-2009). For the first 4-5 years, consumption was restricted to the operator deck only, but we saw a huge shift of customers from the operator deck to other portals. We believed that in 2012, majority users (90-95%) would be browsing outside the operator deck.

We saw the opportunity, and had the vision and capabilities, thus decided to capitalize on this prospect. Our in-depth understanding of the subject and knowledge after being a part of a number of start-ups and drive to deal with new opportunities led to Vserv’s inception.

I believed that the organisation I would build would set an exceptional benchmark in serving all our stake holders - customers, employees and investors. Any organisation which regularly raises the bar of satisfied stakeholdes will be a force in the marketplace. Hence a name which could easily explain my goal “Vserv” and given that I love the mobile ecosystem and that’s the area in which we are operating hence “Vserv.mobi”

Briefly tell us the highlights of Vserv.mobi current offerings and what one can look-out for in future.

Emerging markets (such as India, South East Asia, Middle East and Africa,RussiaandLatin America) will continue to see a substantial mix of feature phones and smart phones. All phones are getting smarter by the day and internet is now a basic feature on all devices and applications will get downloaded on types of devices. Vserv saw this opportunity and created our flagship product called ‘AppWrapper’. The ‘AppWrapper’ wraps apps without touching the source code of the application so the developer does not have to open the file, integrate the code and finally do a quality check. This is important for developers because there are multiple versions of J2ME and Android, thus going over the same process for each version is a tedious and a time consuming task. This is our key differentiator in comparison with other Mobile Ad Networks where the developer has to open the app and integrate the ad code into the app. The developer also has access to the dash board (Ad serving side), wherein they can choose their target audience from categories, change settings and even filter ads.

The AppWrapper is also beneficial for advertisers as they get full screen ads resulting in higher impact and visibility. They can also choose their target audience on the basis of carriers, handsets, etc. Vserv also has SDK integration for IOS, RIM and we are also in the process of releasing more innovative formats.

We also believe that video consumption on mobiles will increase exponentially by mid 2013. In markets such as India, 3G has been around for over a year, thus the next step will be Mobile TV apps. We plan to release products in this space in the 2^nd quarter of 2012.

What is Vserv’s revenue model? 

Vserv collects revenues from advertisers and distributes it across hundreds of app developers.

How do you differentiate Vserv.mobi from other mobile ad networks?

The biggest differentiator that we have compared to other mobile ad networks is our flagship product – AppWrapper and we have already filed for a patent for this technology in theUSabout 12 months ago. This is because we are the only company in the world to have the technology which helps the developer to integrate ads into their apps with minimum effort and maximum monetization.

Vserv is the only ad network with app media across feature phones and smart phones. Our focus on both complements our vision of being no. 1 in emerging markets resulting in a different and wider range of clients vis-a-vis the competition.

Have you been funded? Please share how the funding came about and from whom?

Initially, we bootstrapped and then went on to receive an angel investment from Ajay Adiseshan, founder of Paymate in March 2010 to expand our team. In June 2011, we received our first round of funding from IDG Ventures. The team made a presentation to Pat Govern, Global CEO and Founder of IDG Ventures in 2010, at a stage where the product was under development. Seeing the immense progress our company had made from 2010 (where we made just a presentation of our concept) to 2011 (where we already had a bank of loyal customers), the IDG Ventures team decided to invest in our venture. We established a robust foundation for Vserv internationally in the last 12 months and are now looking also to raise a Series B to become the # 1 player in Emerging Markets.How do you see Indian mobile phone market growing in near future? And, where do you see Vserv.mobi three years from now?

The Indian market is growing at an explosive growth rate, with close to 100 million mobile internet users and is expected to rise to 300 million in 2015. Our goal is to be US $100 million in revenues in the next 3 years.

What are the key new trends emerging in the mobile advertising space?

The key trends in mobile advertising in 2012 are:

• All phones and not just smart phones will browse – While internet browsing was the most basic characteristic available on devices, going forward we will see feature phones becoming even smarter. Many handset manufacturers are launching devices directed at mass audiences in emerging markets who can avail of many more entertainment options than just accessing the web. These handset manufacturers are also expected to bundle popular applications into these phones; which was until now the prerogative of smart phone users solely.
• Mobile internet users will be twice of PC internet users by the end of 2012.  Vodafone India which currently enjoys a market share of close to 19%, released a report in September 2011 stating the telco’s current data customer base at about 27.5 million; up 142% year on year. Extrapolating from this figure, we can estimate the total mobile internet user base at currently close to 100 million. Given this explosive growth rate, the number of mobile internet users is expected to be twice as that of PC internet user by end of 2012. This is a key trend in India and other emerging markets and it will also be instrumental in attracting advertisers to start opening their purse strings towards high impact mobile advertising.
• Ad funded Mobile TV apps will gain traction -3G has been in India for over a year now. With faster internet browsing, greater use of mobile applications and downloads, video streaming etc mobile TV applications will have a high demand, which in turn will attract advertisers to this innovative medium. It will emerge as a good platform for advertising; resulting in a free usage model for viewers.
• The rise of the Independent Developers – Over the last couple of years, there were few independent Indian developers (eg: Twist Mobile, an independent developer which became the first developer from South East Asia to get 15 million downloads on Ovi globally) who focused on their skill-sets and transformed into successful companies gaining traction with downloads generated from global app stores. Companies such as Blackberry, Nokia etc. have now started conducting evangelist programs whereby they organise for such home-grown developer companies to meet with budding developers from Indian colleges to encourage them to join this burgeoning field of application/game development. We believe that 2012 will mark the steady rise of independent developers which will augur well for the mobile industry ecosystem per se.

How big is the team behind Vserv.mobi? Are you looking at hiring?

Vserv has grown from an initial 5 member team to a 50 member team. We plan to scale up to 80 members in the next 3 months.

Tells us about one successful engagement with your client/customer till date (if any)

Vserv is a global ad network and our customers include developers (global, Indian as well as independent), publishers and advertisers. In this era of free downloads, developers are looking to find new and innovative ways to monetise their apps. Twist Mobile, an independent developer and the first from South East Asia to get 15 million downloads on Ovi globally, too was evaluating options to deploy these monetization techniques using the ‘free model’. While most ad networks typically have a very complicated method which involves changing the source code of the application, Vserv had a key differentiator which is the ‘AppWrapper’. The AppWrapper wraps apps without touching the source code of the application so the developer does not have to open the file, integrate the code and finally do a quality check. Using this made Twist Mobile’s global ad earnings possible from day 1 for games and apps with over 90% fill rate garnering $ 5 eCPM. We also saw that international developers such as Glu Mobile, Handygames and Connect2Media started launching their apps on Ovi, leveraging the AppWrapper.

Let us know about your expansion plans.

We are opening up an office inSingaporewhich will be fully operational from March 2012, and also plan to expand to MEA & other emerging markets. As mentioned before, we plan to increase our headcount from the current 50 member team to 80 members. Our expansion plans are in line with our vision to become a $100 million company in the next 3 years.

You started your career as an Entrepreneur, worked in the corporate world for a while and now you are back again as an Entrepreneur, how has been the journey so far?

I have always been involved with building new businesses. In the corporate world, I helped build business models for new products/services in the digital ecosystem. That allowed me to participate in Product Management/Technology discussions and create business models, pricing etc to successfully convert ideas into revenues.After a couple of stints in the corporate world, I was part of the core team at a start up firm named Intercept Technologies. At a time when VC investment was unheard of in the country, Intercept wasWestBridge’s first investment in India. After spending a couple of years there, I moved to Yahoo! handling business development and was part of the core team to launch the first SMS Shortcode service in India in 2001. Moving from the online to the mobile ecosystem, I spent almost 2 years in Yahoo! and launched the first Premium Ringtone Service. Some other services launched included cricket scores, astrology, group SMS, operator logos etc. In 2004 I moved to Mauj and we pioneered rolling out Mobile Internet Portals for carriers in 2004, which was also a new service. Riding on this single product, we rolled out many services & applications running on the Mobile Internet. This was a start up and within two years, we raised our first round from Sequoia Capital. Until Dec 2009, I was with Mauj and held several roles right from leading their India Business to the International business. I also learnt a lot on how start-ups scale, what are the right things to do and what mistakes could be made. For me, Vserv is an extension of my entrepreneurial journey, the difference being everywhere else I was the second key guy in the company here I decided to lead it.

As an Entrepreneur and Intrapreneur, what are your three tips to aspiring entrepreneurs?

There are some commandments which are generic, people can read and learn these in many books. If I have to bring out 3 points which are probably not so commonly heard/ written, I would say the following mentioned below. These can be kept in mind at various stages of your company.

1. When you are looking at pursuing your idea, don’t be secretive about it. Be open about your ideas and share it with as many people as possible - friends and working colleagues, future customers. Everyone can think of similar ideas, what matters is how well it is executed.
2. Take your beta product out and get the first customer quickly. This customer will help you optimise and refine your product once they start using it.
3. Always look at growth milestones of each individual in your team, year on year in the same manner as you look at company milestones.

Can you share a few statistics like – no. of users/clients, most popular products / services / components / apps, maximum response from which country/city, interesting trends and usage patterns, forecasts for the future and anything that is relevant?

Some statistics include:

• Vserv specificReach out to 100 million unique users globally last month
• We monetize mobile media from thousands of publishers and developers and the platform is a one-stop marketplace
• There are over 10,000 apps on the network and we work with more than 7000 mobile publisher
• Vserv served to 12 billion ad requests in January 2012 (globally), out of which 75% was from India
• Industry scenarioPresently, in India, 90% of the internet browsing is on feature phones and 10% from smart phones. Fast forward 4 to 5 years, the overall universe of browsing will grow 20 folds and the mix of feature phone and smart phone will be 50:50. All feature phones are becoming smarter feature phones. India’s browsing pattern is representation of Emerging markets
• Laptops are priced at Rs 25,000-35,000 whereas feature phones are priced at Rs 6000-7000
• India has close to 100 million mobile internet users, which is expected to rise to 300 million in 2015 – market is growing at an extremely fast pace
• The choice of mobile content for users is massive –Over 1 MN unique apps are available across various kinds of App stores – OEM, Telco, 3^rd Party App stores or OS store. Apple store has 400,000 apps, Android store has 300,000 apps, and the Ovi store has 150,000 apps. .In India 500 MN app downloads happen every month.
• ClientsMobile app developers such as Glu mobile (US), HandyGames (Germany), Connect2Media (London)
• Mobile app developers in India- Twist Mobile, Nextwave Multimedia, Nazara, Indiagames
• Advertisers such as Yahoo, Ebay, GroupM , Tata Photon
• International Advertising agencies such as Ring Ring Media, SOMA agency (UK), NeverBlue
• Huge portfolio – not just from India, but globally