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Beerud Sheth, Co-Founder & CEO, SMS GupShup
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What happened with the West in the Internet sphere will happen to mobile in countries like India, and the opportunity and value is immense for advertisers through reach and engagement in a way no other medium can. So, I believe that mobile will emerge as one of the biggest new advertising medium in India and in other emerging markets.


Beerud Sheth is the Co-Founder and CEO of Webaroo. Prior to Webaroo, Sheth had founded Elance, a pioneer of the world's largest online services marketplace. He played various leadership roles at different stages of the company's growth, including developing product and business strategies, product management, marketing and business development, and remains on the Board of Directors.

Prior to founding Elance, Sheth had worked in the financial services industry, modeling, structuring, and trading fixed income securities and derivatives at Merrill Lynch, and before that at Citicorp Securities. His graduate research at the Massachusetts Institute of Technology's Media Lab involved developing autonomous learning software agents for personalised news filtering.

Sheth earned an MS in computer science from Massachusetts Institute of Technology and a B.Tech in Computer Science from IIT Bombay, where he was awarded the Institute Silver Medal.

In conversation with exchange4media’s Robin Thomas, Sheth speaks at length about SMS GupShup’s journey and growth in India, and monetising the mobile medium.
 
Q.
How has the journey been for you so far?
A. The journey has been great and I love solving challenging problems. I have studied computer science at IIT Bombay and MIT, I was in financial services – the common thing in all of those was innovating and finding new solutions to complex problems. So, whether it was my research at MIT or developing new financial products at MIT or developing new solutions at Elance or at Webaroo, this has been the common theme. Thus, I have enjoyed a diversity of domains and different geographies and this has been the common theme.
Q.
And how has the journey been for SMS GupShup since its launch?
A. SMS GupShup has been growing very rapidly. It’s on an explosive growth track, much faster than what we expected and is possibly the fastest growing company in India and perhaps even the world, because it grew very virally and by means of word of mouth alone, and today we are close to 25 million users with no advertising at all. We had to, therefore, scale our technologies, we had to build our business model very quickly and basically it’s suddenly grown into a whole new advertising medium that would make sense for brands, advertisers and agencies. Hence, it grew so fast that we had to rapidly build our sales team, educate the ecosystem and so on. Our revenues, too, have been growing very rapidly. We have probably a couple of 100 top large consumer brands that are using our platform. We have maybe somewhere between 5,000 and 10,000 small and medium enterprises also using the platform. Our revenues have now started growing very rapidly as well and we are within six months of breakeven.
Q.
Any revenue targets that you have set?
A. Over the last 10 months, our revenues have grown ten times, and we if we can continue the same for another 10 months, it would be very exciting.
Q.
Do you see monetising content as a challenge today? How does SMS GupShup monetise its content?
A. What you have seen in the western market is that the web has emerged as a big medium, and social media sites in particular have grown very rapidly. Anytime a new media comes up, the first thing to do is go build a community and then the advertisers come on, and at some point in time, they get profitable. So, this trend has played out many times over on the web. When you come to an emerging market like India, the Internet is very small, it is still very nascent, while mobile is huge. For instance, there are only 50 million users on the web, whereas there are nearly 500 million mobile subscribers. So, it’s almost as if the Internet does not exist and mobile is the medium. Therefore, firstly, SMS GupShup is one of the first companies that have built a social media platform on the mobile medium, which is ideally suited for a country like India. The point, therefore, is our community; our platform is much more suited for mobile than web services.
Q.
So, does monetising content pose a challenge to mobile as well? How do you see this space?
A.

When it comes to monetisation, what happened with monetising the web in India does not tell you anything about monetising mobile in India, because web advertising has very little revenues as the web itself has very little reach, merely 3-4 per cent in the country, and that is why it has about 3 per cent of the advertising.

On the other hand, mobile has a massive reach, the kind that the Internet never had. So, advertisers now need to realise that here is a whole new medium that is available to them, that offers the interactivity of the Internet, but offers the reach of television. While television and print are great for what is called brand awareness, mobile is good for brand engagement. For instance, Lays has set up a community on SMS GupShup with about 1.7 million members, which is growing rapidly, wherein they send updates about the product and the flavours consumers would like, etc., so, they are engaging with people who like their products and the prospective customers. In other words, what happened with the West in the Internet sphere will happen to mobile in countries like India, and the opportunity and value is immense for advertisers through reach and engagement in a way no other medium can. So, I believe that mobile will emerge as one of the biggest new advertising medium in India and in other emerging markets.

Q.
So, do you see mobile advertising overshadowing broadband Internet in India?
A. Broadband Internet, I believe, is not going to happen for a very long time as there are structural problems related to this, because even landline connectivity is declining in India. Wi-Fi does not scale very well, 3G spectrum auctions, too, are expected to happen, and even when new spectrums come in, a lot of them will be used for voice, because we still have very high call drop rates. So, there is a long way to go for broadband Internet, and while broadband Internet users would still grow, the 500 million mobile subscribers will grow even more and its reach may even surpass that of television. Therefore, I believe that the biggest untold advertising story is that mobile has emerged and mobile advertising is bound to follow.
Q.
Does mobile advertising still need evangelising?
A. Mobile advertising is just one part of mobile marketing, so mobile marketing includes both mobile advertising and mobile engagement. Mobile marketing, I believe, is already a Rs 300-500 crore market in India, which is almost as big as digital advertising marketing in the country, and all of this has happened in just a year. Mobile marketing is seeing explosive growth, its numbers are growing and that’s where the reach is and that’s where the advertisers will follow, not just the large ones, but also the small ones.
Q.
So, how was the year 2009 for SMS GupShup and what are your 2010 growth plans?
A. The year 2009 was fabulous for SMS GupShup, wherein our user base grew three times and our revenues grew ten times, so, it could not have been any better. We expect 2010 to be even better, we expect rapid user growth, wherein we would probably see doubling of our user base and we would more than double our revenues as well, and we expect very dramatic growth in users and the business.
Q.
In terms of measurement, would you say that we have reached a point for a credible measurement system for mobile?
A. Firstly, unlike the web, the mobile is much harder for a user to fake. It’s much easier to count the users on mobile than on the web. In terms of an independent audit agency, I think these kinds of systems will evolve as the medium gets more mature, which is happening.
Q.
Could you share with us the revenue streams of SMS GupShup?
A. Brands as well as small and medium enterprises can either advertise on SMS GupShup or they can do engagement marketing on SMS GupShup. By advertising, it means they can send their messages to our users, or engagement marketing means they can build their own community to retain or engage their existing users as well as find new users. Just like SMS GupShup has grown virally by word of mouth, SMS GupShup can also help brands grow virally. For instance, converting your customers to advocates, thus making it a cost effective way to acquiring new customers. Thus, advertising and engagement marketing are the two revenue streams for SMS GupShup.
   
 
© exchange4media 2005  

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"In a market like India that is really just starting to ramp up, you have certain marketers who are still focussing on traditional media and beginning to really think through how they can adopt the Internet. So, adoption is fairly low in this market and it is starting to see a pick up quite dramatically."

Gregory Coleman-Executive Vice-President,- Global Sales, Yahoo! Inc.-6/5/2007


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Abraham Mathew-President- CIOL-2/1/2004


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Osama Manzar-Founder & Director- Digital Empowerment Foundation-1/16/2004


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Rajiv Hiranandani-VP-sales and Mktg- Mobile2Win-12/29/2003


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Pranay Anthwal-Group Head- Starcom Digital-11/20/2003


"Today's online advertiser is savvier and is serious about using the medium. The Internet has become an essential part of the media mix for quite a large number of advertisers. It is no longer a fad or a fashion to advertise."

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Raj Singh-Business Director- Active Media-8/26/2003


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Sanjay Trehan-Chief Executive- Internet HindustanTimes ltd-7/16/2003


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Johannes Larcher-General Manager- Overture International-6/30/2003


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Shriram Adukoorie-Director- MSN South Asia-6/12/2003


"When people are at home they have their television sets on and watch NDTV. When outside somewhere, they have their mobile handset and SMS 6388 for news. And when away from television, they log on to NDTV.com on their computers."

Vikram Chandra-CEO-NDTV.com- NDTV-5/27/2003


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V Achuthan Kutty-CEO- BridgeOverTW-5/12/2003


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Neville Taraporewalla-Director - Sales & Business Development- Yahoo! India-4/30/2003


"The issue with online advertising is that the clients and agencies still have a phobia. Actually, they have not invested enough to understand the medium. And there is a problem with the Internet industry itself."

Rajesh Sawhney-COO- Times Internet-4/3/2003


"The information about Internet and how people use it and transact on it, needs to be unlocked to demonstrate the true value of the medium to advertisers, agencies and media sellers alike."

Lynn Bolger-Exec. Vice President, Agency Development- comScore Networks-3/21/2003


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Sudhanshu Sarronwala-Co-founder & CEO- Soundbuzz-10/1/2002


"Smaller towns and cities will become big contributors to online shopping since purchasing power there is increasing at a far higher rate than ease of access to latest products."

Avnish Bajaj-Chairman & CEO- Baazee.com-9/30/2002


"To increase the penetration of Internet in India, besides computers, we should use the existing tools to access web. You've got 40 millions TV sets (with cable connections) in India and even if 25% of them are utilized for accessing web then straightaway you get 10 millions (users) added."

Kiran Karnik-President- NASSCOM-9/30/2002
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