Streaming Now: Gut, Nut & But

The 25-year journey of Baskar, Vidhya, and Srini can be summed up in one word: OTT. They are ‘opposites,’ have an exciting ‘today,’ and a promising ‘tomorrow’

We had no clue what it means to run a company,” confesses Baskar Subramanian, who gives us a peep into the mindset of the three young rookies from Coimbatore — Baskar, Srividhya Srinivasan, and KA Srinivasan (Srini). All three graduated from the Government College of Technology, the trio joined Texas Instruments as software engineers, and after three years of their maiden job, a strong impulse to build something ‘from India for the world’ got the better of the friends. They started Impulsesoft in January 1999. “The only thing we knew is that we just wanted to build a product company,” says Srividhya aka Vidhya. “But we had no idea what we were doing,” she adds.

Baskar tells us what exactly the musketeers were doing. FUN. “We were just having fun,” he smiles. And if you think that the gut-driven and hyper-optimistic entrepreneur was having plain-vanilla fun, then here comes a shocker. It was probably a few quarters into their entrepreneurial journey. On one of the gloomy days, he briskly walks into his office and makes a grand announcement. “Guys, we don’t have money in the bank,” he says. “So, we won’t be able to pay salaries,” he added.

If the founder expected brickbats, Baskar was stunned by the reaction. All the employees started clapping. “Everybody was cheering and clapping hysterically,” he recalls. And yes, they were not sarcastic by any stretch of the imagination. It was just that a passionate founding team had met an equally passionate set of employees who were having fun in being part of the thrilling ride. “Everybody said, hey, great, that’s good. Don’t worry if you don’t have money. We’ll look at it next month,” he says.

The emotions indeed ran high, but they were unique. Missing salaries was okay. There was no concept of ESOPs. All were together. All were part of something. All were young, brash, and high on adrenaline. “And all were having fun,” says Baskar. Vidhya chips in. “We were so naïve and so dumb,” she says.

All three were rookies. Therefore, naivety got seamlessly ingrained in their entrepreneurial journey. Take, for instance, this anecdote shared by Vidhya. “We didn’t know how to price our Bluetooth protocol stack,” she says.

So, this is how the episode panned out. There was a phone call, and it was for a product inquiry. “How much does it cost,” the prospective buyer asked. Baskar and Srini were sitting opposite each other. Both stayed clueless. “What to say,” said Bhaskar, expecting a response from Srini. “$40,000,” came the reply. What happened next was hilarious. The buyer hung up and dropped an email. “You guys don’t know the price of what you are building,” he fumed. “I can tell you one thing for sure. You guys don’t know what you are building,” he signed off.

Price, Right Price & Surprise

The founders were in a state of shock for a few hours. “Maybe we under-priced it,” was the unanimous conclusion. “We need to be more aggressive in pricing,” was the second point on which they agreed.

After a few days, another customer came. This time the greenhorns boldly asked for $60,000. “Okay. Does this exclude royalty or is it inclusive,” the customer from Germany added a follow-up query. The cofounders were stumped. Royalty was an alien word to them. “Okay, make it $120,000 with royalty,” they came up with a revised price. “There was no logic, there was no reasoning, there was nothing. It was just a random price,” recalls Vidhya, who was pleasantly surprised to know that the buyer had agreed, and was coming to India to meet the founders.

There was a small problem, though. The founders didn’t have an ‘office.’ They just had a second floor in the building, which had a few chairs, and tables. “We don’t have a conference room,” Vidhya freaked out. The founders hired a contractor, got a conference room built in a record time, added furniture, and now they were set for the meeting. But something was still missing. A handful of employees were on leave! You need people to populate the room and make it look like an office. Right? So, all the staff was asked to report immediately.

Meanwhile, the Germans came on time, and were happy with the product, the team, and the small setup. As the main guy came out of the conference room, he placed his hand on one of the walls. “His palms got stuck,” recalls Vidhya. The culprit? It was a fresh lick of paint! There was no let-up in embarrassment and fun. A few months down the line, a Japanese customer came to the office. Vidhya’s landlord was busy constructing an additional floor, and suddenly there was a loud thud. “The Japanese thought it was an earthquake and scurried under a table,” she says.

Months turned into quarters and the journey progressed. Over time, the cofounders realised two things. First, they couldn’t scale the business. “We just didn’t know how to make it big,” says Vidhya. Second, there was always a cash crunch. On multiple occasions, the cofounders failed to pay salaries on time. There were times when people took pay cuts. All these were just fixes.

The underlying problem was a lack of scale, a perpetually cash-strapped venture, and a missing idea of TAM (total addressable market). In December 2005, the trio sold Impulsesoft. Though everybody made money, the dream of building something big and meaningful remained unfulfilled. The first-time founders were inspired by the book “Build to Last’’ and resonated with the ideology of building companies that could turn into institutions and outlive them.

Maggi, Amagi & Astrologer

Two years later, the trio embarked on 2.0 of their journey and started their unfinished agenda in 2008. This time the dynamics were different. Vidhya explains. “By 2008, Baskar and I were married, and I was carrying our second child,” she says. There was something else that was different: the name and the nature of the second venture. “When I told the name to my father, he thought we named it Maggi,” she laughs. It was Amagi.

This time, the founders vowed not to repeat mistakes. They had a plan. Baskar takes us back to 2008. When we started Amagi, we didn’t start with an idea. We didn’t start with a plan,” he says, adding that the friends identified three tenets. First, they wanted to build something at least for 25–30 years. This journey, they vowed, can’t be truncated. “We wanted to build a lasting institution, and not something which could be sold,” he says. Second, the founders wanted to build something disruptive. “We’ll never pick an idea if somebody else is doing it. So, we wanted to be the first one to do it,” says Vidhya. Third, Amagi would be an innovative company.

Interestingly, the idea of Amagi (you might call it the birth of the idea) was indeed innovative and disruptive. It was born in a park. It was 11 am on Monday. Vidhya and Baskar were working in a park in JP Nagar, Bengaluru. Suddenly, a young boy walks in and starts talking with Baskar. “Uncle, please show me your hand. I’m a palmist. I will tell you about your future,” he said. Baskar remained cold. “Please let us work,” he didn’t entertain the soothsayer. The fortune teller left after a few minutes. And then something hit Baskar, and he started joining the dots. “It’s 11 o’clock, it’s a Monday morning, and we are sitting in a park. Now, anybody would think that we are jobless,” he explained his logic to Vidhya. “The astrologer had identified his customers and was sharply targeting them,” he said. Thus, ‘target advertising’ was born and Amagi started its innings.

The beginning was again fun, but this time loaded with sarcasm. The founders were being rebuffed by DTH operators who found the idea outrageous. “Guys, first go and execute this with cable players. And if it works, then come to us,” was the jibe. “We were so dumb. We didn’t even understand the sarcasm,” says Vidhya. The valiant three soon figured out that cable needs two parties — cable operators and TV channels. So they explored both. There was an interest, but to execute the plan there was no handy technology. They bought second-hand equipment from the US to insert advertisements, but the cost of working with one channel was coming to a staggering $30,000! With some juggad and innovations, the founders built their own box and brought down the cost to $250!

There was one problem, though. The TV guys declined to sell the box. So Amagi decided to buy ad spots on television and take care of the backend and front end of operations. “We were all technologists, and were very clear that we will stay away from a bunch of things,” says Vidhya. So, there would be no ad sales team. No advertisement creative team. No ad operations team. Ironically, the founders ended up having everything.

While the business grew, it remained in losses. The energy was largely spent on taming bully — cable operators. Too much money was being invested but the return was disproportionately less. Somehow, the engineers figured out a technology to fix the issue, and it worked. Now it was the turn of the second bull to be tamed — TV channels. Amagi was still losing money. Buying ad spots and doing business was turning out to be unsustainable. “We felt that we have lost the game,” says Vidhya. The cofounders decided to have a word with their board members. “We cannot continue this business. We have to pivot,” they bluntly told the investors.

Here Comes The Pivot

It was the fag end of 2016. Amagi pressed the pivot button. Suddenly, the ‘fun,’ which was so quintessential during the Impulsesoft days and was also there in the first phase of Amagi, disappeared. It was time to reset the business. It was time for hard calls. It was time to brutally cut the headcount. This time, though, nobody was cheering. Nobody was clapping. “I have never done such a thing in my life. I had to let go of so many people,” recalls Vidhya. Her heart bled but pink slips had to be delivered.

Local ad sales team, the centralised sales team, ad operations team, geotargeting business team…a bunch of departments had to be closed. “Our heart broke. We found it extremely difficult to let people go,” says Vidhya who did her best to help those who were getting trenched. Some were offered cash, some were helped with jobs, and some tried to be placed somewhere else. “I think God showed us a way of saying that sometimes you have to make hard decisions,” she says. “It was the toughest time for Amagi,” she says.

The international pivot, though, didn’t have a great start. But the team persisted. In late 2017, Srini moved to the US, and found a niche and salvation in digital customers. What was of immense help was maintaining a sharp focus, not doing too many things and being unrelenting in perseverance. “We failed multiple times, but we never gave up,” says Baskar.

What also helped in the journey was having an open mind towards TAM and accepting that the companies are nothing but the children of the markets. “We were too bull-headed to some extent,” says Baskar. “We kept saying we will change, we’ll move, and we went against the human psyche,” he says. A better way to do business, he suggests, would have been to work on technology, product, and other aspects of the business rather than managing the human psyche and the market. “It doesn’t work,” he says.

What, interestingly, also doesn’t work at Amagi is having a founder’s view. “Three of us are different but balance each other,” says Baskar, adding that the cofounders do have conversations, debates, and discussions which at times might be quite animated. But still, there is no founder’s view. “There is Vidya’s view, Srini’s view, and my view. Now you are free to pick up whatever you want,” he smiles.

Indeed, it takes three to tango!