Building India’s First Billion Dollar Tech Company: InMobi Co-Founder Amit Gupta (Part 3)

Sramana: What was your run rate for the $500,000 that you raised?

Amit Gupta: We were trying to build our own B2C property, so that also involved marketing money. We had to solicit that money without a defined run rate. We started with some basic promotions. We quickly realized that we had a very new concept and we were creating a new market. We decided to find another business model, that of Groupon, and become a network. We targeted companies who already had SMS users such as India Times.

We would have them send the SMS and then add the details of a particular deal. We started gaining some national attention following this strategy. That was important because India was very much a cash economy, which meant we had to wait for people to give us money. It was not a very smooth process and required different operations at different levels in every city. That is why we moved to a network model where we could sign up various aggregators.

Sramana: It sounds like you were basically operating an SMS advertising network.

Amit Gupta: Yes. There is a limitation as to what you can do. You can call that number or you can send a short code message. That really limited the targeting that could be done. That impacted the ROI because we were targeting $10 CPM. We really had to push this as a sustainable medium for advertisers. There was oversupply of SMS as a medium which resulted in a $5 CPM, then a $2 CPM and finally a $1 CPM. Other companies built their business models on the back of advertising as well.

Sramana: It basically became junk inventory.

Amit Gupta: It became oversupplied. The demand and supply forced the pricing down. We were basically playing in a commodity market. It was not an interesting proposition at that point. When we would talk with friends and families about what we were doing, the first thing they would say is “Oh, you’re the company sending me those spam messages”.

Sramana: It seems like you had gone through two pivots by this point. What was happening to your cash situation at this point?

Amit Gupta: It was depleting every month. There was a phase when we were close to depleting all of our cash. We had vendor payments, office rent, and all of the expenses of running a business. We looked at our journey up to that point as well as mobile Internet. We looked at the devices and platforms that started to see some traction. We put together a small team to build a platform to support a mobile Internet. We did that in tandem with running our SMS business. We actually ran out of cash at this point and we had to go to our partners and vendors and tell them that we would pay them later. Most of us were not taking salaries.

This segment is part 3 in the series : Building India's First Billion Dollar Tech Company: InMobi Co-Founder Amit Gupta
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