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Virtual boardrooms: Do they work?

Early this month, when Times Internet Ltd announced the acquisition of US based cricket broadcaster Willow TV International Inc, it was made from San Francisco, where the company’s chief executive Satyan Gajwani is currently based.

Gajwani moved to the US last year and today travels frequently between the two countries. The company has a presence in the US market through a subsidiary – Times Global Partners.

Gajwani isn’t the only one managing an India business from half way across the world. Many of India’s startups in the digital space are being run from another country, with the founders and CEOs not based in the home market. Ad-tech firm InMobi Technologies, OTT platforms Saavn and Vuclip are among those.

While it may seem that these founders have the best of both worlds, flying in and out of the country as they manage their digital businesses, venture capitalists throw in a word of caution.

“All experience so far, including that of Seventymm and other India back-end companies, shows that it usually results in failure,” says Mahesh Murthy, venture capitalist and co-founder of Seedfund.

Common Ground

Technology is the common thread between all the digital businesses. Calling Silicon Valley the ‘mecca of innovation’, Mohit Saxena, co-founder and CTO of InMobi, says, “From a technology perspective, there is no doubt that we have to stay connected with what’s happening in Silicon Valley.”

Despite startup owners claiming to be in constant touch with their Indian businesses, investors say managing two different work cultures and meeting expectations from far away become challenges

Talent is another factor. “The advantage you get from teams in the West is years of expertise,” says Rishi Malhotra, co-founder and chief executive, Saavn.

According to Malhotra, this is one of the reasons that the OTT platform has been able to capitalise on the user data it has collected over the years. “It is a direct result of us working alongside the experts from the West starting five years ago. They had 20 years of experience to share with us,” he explains. Saavn started off in 2006 as a B2B firm offering Bollywood content in North America before turning its focus on the Indian market.

The exposure to markets in the West also provides a chance to share knowledge with peers in India. According to Saxena of InMobi, the firm has worked on open-source projects such as Falcon and Lens in the past. “Rather than keeping our work (in the space of data intelligence) walled in, we have collaborated with some big tech giants and their core development teams,” he explains.

Falcon is a data management and process orchestration platform that InMobi had built. The firm made it open source through Apache Software Foundation. Similarly, Lens is a platform which provides an unified analytics interface which gives a common view of data stored in multiple tiers.

However, managing a global business comes with its own set of problems. To begin with, managing different time zones. For instance, for most of the founders based in the US, the day begins at 3 am when it’s about 1:30 pm in India. “This is the time when one usually starts preparing a list of things to discuss or send e-mails to colleagues, based in India,” says Nickhil Jakatdar, co-founder of Vuclip Inc.

Typically, meetings are conducted at 5-5:30 am when its 3:30-4pm in India using tools such as Slack, WhatsApp, and Skype to manage communication.

“But personal connect cannot be replaced by virtual connectivity, especially in case of those offices which generate a major share of the business,” says Saxena of InMobi.

The ad tech company claims that of the four founders, one is always travelling.

Despite startup owners claiming to be in constant touch with their Indian businesses, investors say managing two different work cultures and meeting expectations from far away becomes a challenge.

“This is not about running a US market company with a back office in India. That is possible. This is about running an India-market company from the US,” says Murthy.

Perhaps also a reason why these owners now have a leadership team in the country. For example, last January, Saavn hired former Google India country head (mobile) Mahesh Narayanan as its chief operating officer. Similarly, in January this year, Vuclip appointed Vishal Maheshwari as the country manager for India. Maheshwari is responsible for consumer adoption, engagement and monetisation in India.

As Vuclip’s Jakatdar says, startups now need to have a dedicated team to handle day-to-day affairs to maintain the momentum.

Vuclip claims to have a free user base of 20 million and paid subscriber base of over five million in India.

In addition to a home team in India, startups are always in need of fresh funds. For instance, last July Saavn raised $100 million in a new funding round led by Tiger Global Management. Existing investors such as Bertelsmann India Investments, Steadview Capital, Liberty Media and Mousse Partners also participated.

The fact that the the top management does not sit in the home market can also, at times, impact fund-raising plans.

In a recent interview to ET Magazine, the startup’s co-founder Naveen Tiwari admitted that it has made a few changes in the operating model.

If earlier, it followed a 60:30:10 model where 60 per cent focus was on operations, 30 per cent on strategic issues which had no direct impact on the revenues and 10 per cent on research, that ratio currently is more likely to be 80:20:0. Earlier this month, InMobi’s valuation went down to $800 million, after a recent fund raising conversation with Chinese game publisher Youzu. As per several media reports, the unicorn was expecting a rise in its valuation to $1.5 billion This turned the unicorn to an unicorpse (a unicorn which see a dip in its valuation).

However, Saxena of InMobi says it is the only Indian company to crack the Chinese market. “As a global company, the challenge is to bind employees together with a common organisational dream and aspiration. It is a matter of pride for our investors that we operate at a global scale and are not just confined to certain regional boundaries,” he adds.

But Murthy has his reservations as he says, “I don’t know too many investors who will support an India-market company being run from overseas.”

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