Having entered the coveted $1-billion-club of startups in India, Kavin Bharti Mittal is more confident than ever about the success of his four-year-old startup Hike. In August, the messaging app raised $175 million (Rs 1,170 crore) from China’s Tencent Holdings Ltd, Taiwan’s Foxconn Technology Group and other investors.
Hike’s rivals, incidentally, include global tech giants such as Facebook and Google but that doesn’t deter the young entrepreneur, who also happens to be the son of Bharti Enterprises’ chairman Sunil Bharti Mittal’s son. Even as Whatsapp, Viber, Nimbuzz and Line make steady inroads in India, Mittal is confident of his own space.
In an email interaction with Techcircle, he shares how valuations are reflective of the future growth potential of a company and what does he think about competition. Edited excerpts:
Hike raising fresh funds became a big development for media because it catapulted the company into a unicorn. Do you feel elated at being part of the ‘big boys’ club?
The latest $175 million funding from Tencent and Foxconn with existing investors following, is an important milestone for us. At a $1.4 billion valuation, it just goes to show the strong foundation and fast growth of the company, and will help us in raising the profile of the company to hire better and more importantly, invest in some of our long term bets.
What do you think about the competition with WhatsApp? What’s next for Hike?
Very soon, the market will realise that for Hike to win, WhatsApp doesn’t have to lose. It’s really as simple as that. We’re going to be playing an entirely different ball game in 2017. Keep an eye out for that.
At a time when none of the companies, including the unicorns, is making any profits, do valuations have any strategic significance?
Well it’s a global topic, not only limited to India. More often than not, especially at an early stage, valuations are always derivatives of the future growth potential of a company. The faster a company is expected to grow, the higher the valuation. Also, one must note that the internet user base has grown significantly compared to a decade ago. We’re expected to end 2016 with over two billion smartphone users, so the total addressable market for companies in the internet space is much larger as well. Lastly, the internet space globally has shown that you must have a long term view on your business for you to win big so it’s not surprising.
In a constrained funding environment, high valuation could also be limiting when it comes to raising fresh funds from investors or getting a strategic partner on board. Do you agree?
There will always be funds available for the best companies in any environment. It’s as simple as that. And it’s important to remember that there is always a funding cycle for any market globally. Ups and downs are expected but what’s important is where you end up 5-10 years down the line.
You have spoken of your interest in artificial intelligence and machine learning space. Do you plan to usher in new projects in these areas or you want to use them to push Hike?
Every decade or two, a new technology emerges that allows the company that spots the opportunity to build a step jump consumer experience that is a quantum leap ahead of an existing paradigm. Today, we have cheap smartphones with great cameras and now we have 4G networks on the way. You’ll soon have consumers with good enough devices connected to a fast pipe. This changes everything.
You can already see signs of us using Machine Learning in the app with Stickers for example. Our users have over 10,000 stickers to choose from, but when you’re in a conversation, it is super tedious to find the right sticker for the right moment. So we launched ‘Quick Suggestions’, a neat idea that recommends Stickers to you based on last Sticker received. It’s really, really cool. You’ll see us invest a lot more in such ideas. We’ve never been more excited.