December - 2012 issue > Cover Story
The Men who Changed the Game for Mobile Monetization
Anamika Sahu
Friday, November 30, 2012
Simple Questions

It all started with a question—a simple yet profound question that would shape a fledgling industry into a multi-billion dollar powerhouse: “How will all these new mobile app developers make money?”

The founders of Mobclix weren't the only ones asking this question, but what they did next led to the creation of one of the hottest startups in the mobile advertising industry—and then to its merger with the largest publically traded mobile focused company in the world, Velti (Nasdaq: VELT). The journey was far from easy, but they stayed true to their vision, and they stayed together—from the Palo Alto coffee shop where Mobclix was founded, to the basements and garages where its operations began, to the forefront of mobile innovation.

Long before mobile was a major force, the founders of Mobclix had a vision for changing how companies initiate, develop, and deliver advertising and marketing initiatives across the mobile channel. More than a decade later, their focus and reach have expanded dramatically; in 2012, Mobclix touched over a quarter billion consumers worldwide. The Velti team now has a global footprintwith more than 1100 employees in over 35 countries. The company supports Fortune 500 companies around the world in delivering innovative mobile advertising and marketing campaigns that reach their consumers and drive increased awareness, loyalty, and engagement with their brand. With access to over 4 billion consumers across the globe, Velti is changing the game for mobile marketing.

Rewind: June 2007

The release of the iPhone met incredible fanfare. Already coveted as the consumer device of the new century, its true potential was still only being guessed at. Among those speculating were four up-and-coming tech industry leaders.

Krishna Subramanian was just wrapping up his responsibilities as a founder of BlueLithium following its acquisition by Yahoo! and had begunmeeting with industry thought leaders on other areas ripe for innovation. “With the introduction of the iPhone and the subsequent ecosystem around it, I knew that mobile needed to be my next area to disrupt,” says Krishna.

Vishal Gurbuxani was in the midst of coming up with innovative ideas for enterprise and fortune 500 companies as a lead manager at Accenture Tech Labs, the incubator and idea accelerator for Accenture. “Mobile is changing humanity and its ongoing impact will be one of the largest disruptions we have seen during our time. Just look at the disruption it is causing in the 10 trillion dollars of consumer spend from the United States GDP,” says Vishal. This was the premise that many other large companies wanted to capitalize on, but couldn’t get the puzzle pieces to fit together.

Sunil Verma was working at the epicenter of the fast-growing digital media M&A sector, where he shaped the industry by leading some of the largest deals in India to date. With deep knowledge of global operations and product management, he showed an uncanny ability to build the strategy to execute and reach those goals. “The potential was clear for mobile to drive growth across virtually every part of media, commerce, and communications,” says Sunil. “With the right strategy and team, the opportunities were tremendous.”

Sumit Rai was in the middle of an illustrious career as a top east coast private equity and venture capitalist. Having done stints on both coasts and bringing a number of companies public and through successful exits, it was time to come to take all the advice he had given and apply it to thechance of a lifetime. “The mobile opportunity was too compelling for me to remain behind the scenes as a backer and mentor. I was determined to play an active role in the creation of the next great industrial sector, and fortunate to find the right collaborators to realize this vision.”

The Four Horsemen:

Vincent Lombardi, a famous coach of American football, once said, “The achievements of an organization are the results of the combined effort of each individual”. Krishna, Sunil, Sumit, and Vishal’s distinct backgrounds were pivotal in brainstorming and incubating their startup. Krishna brought deep insight into advertising, marketing, and product strategy. Sumit contributed his keen understanding of corporate development and governance, financial strategy, and corporate vision. Vishal brought product, technology, systems, and technical operations to the table, and Sunil, his expertise in business development, product, competitive strategy, and operations.

In early 2008, The Four Horsemen—a nickname used by many early employees and competitors—came together for a brainstorm session and realized that the iPhone was going to set off a major tech wave. They felt that the timing was right to create a platform that combined analytics and monetization—the first game-changer for Mobclix. They brought a novel solution to an ecosystem that was just starting to realize its full potential. Looking back at this first brainstorm, Krishna says, “We didn’t just want to have a point solution or a me-too application. It was all about scalable revenue from day one. We wanted to create a company that had longevity and helped disrupt how application developers make money.”

While the diverse, complementary strengths of the colleagues were crucial for the new venture, equally important was a simple truth known by all four: that unity powers success. All too often, promising startups fall victim to internal bickering, politics, and power struggles—especially when the going gets tough. Even as they debated key points of business and technology, the four made the process remain creative, never destructive. At the end of the day, their shared vision kept their differences in context, their goals in alignment, and their partnership strong. They would succeed together or not at all.

Four Years Later, a$40 Billion Dollar App Market

Where many earlier mobile solutions focused creating value for marketers, Mobclix would help mobile developers make moneyby creating amazing applications that consumers could download free to their iPhones or Android devices. By connecting the best apps with the best ads every time, Mobclix would bring efficiency to a mobile advertising market wrought with multiple layers and endless middlemen. This would help the top global brands and agencies reach mobile customers like never before, while make it possible for more developers quit their day jobs—thus creating a win-win-win for developers, consumers, and brands alike.

There was only one problem: timing. By 2008, countless companies had been funded in the mobile space. The dominant players, including Admob, Millennial Media, Jumptap, and Quattro Wireless, had raised an average of $30 – 50 million. But now, with the financial crisis looming, venture capitalists were tightening their belts for the coming apocalypse. With funding in short supply, it would have been understandable for the four horsemen to curse their luck, fold their tents, and find a different opportunity to pursue. Instead, they pushed ahead, driven by the conviction that a good idea can beat a bad market any day. And they were confident that, when it came to mobile, their idea was the best one yet.

Having pulled together a team of engineers, friends, and anyone else who would listen, Mobclix launched in 2008 at the Apple WWDC Conference. “We wanted to put our product in the hands of our customer right away. We couldn’t wait to see them use itand get their feedback,” says Vishal. Hundreds of developers signed up, forcing Mobclix to become very focused and decisive abouttheir initial launch partners. “We were very excited that Mobclix was received so well. We used guerilla marketingand we always focused on our customer,” says Sunil.

The industry quickly took notice. In September 2008, Mobclix was chosen from among thousands of applications for the TechCrunch 50 list of hot startups. Soon after, Mobclix became the only U.S.-based startup to win Seedcamp in London, the equivalent of Y-Combinator in the U.S. Mobclix continued to execute on its plan, working with industry leading publishers such as ngmoco, EA, Fox News, and MySpace as well as small indie developers that racked hundreds to thousands of dollars a day.

Taking the Lead through Focus, Determination, and Execution

By late 2008, Mobclix had achieved market momentum, customer validation, and industry excitement. While the recipe for success was on the table, the question of funding remained.“Based on my years of experience as an investor, I advised that we bootstrap Mobclix ourselves and really try for alternate rounds of financing. I wanted the company to run very lean and allow for employees to come away with some real equity. I have seen too many founders and employees get burned with traditional financing,” says Sumit.

Leveraging strong networks in the valley to bring on old college friends, old co-workers, and interns, the team’s passion for its work proved contagious and helped keep the company moving forward during the challenging early stages. “Created the industry’s first marketplace for smartphone applications was a chicken-and-egg proposition,” explains Krishna. “We needed dollars to flow into the brand new marketplace we were creating. I drew on my background in advertising to show brands and agencies just how amazing the iPhone and other smartphones were going to be—and to convince them that Mobclix would be the best way for them to put the emerging mobile channel to work,”says Krishna.

The small but growing Mobclix team achieved outsized results by leveraging key trends like open source technology, cloud infrastructure, big data, and the latest in software development methodology. “It is exciting that a small focused group of engineers can create infrastructure across the globe with a push of a button. What would have taken hundredsof engineers in the past, we can now do with only a handful, and accomplish things that would have been imaginable in the past,” says Vishal. Together, the team built a platform that allows advertisers to target segments and users, and to apply robust analytics, in a privacy compliant framework. As one of the most versatile and scalable products on the market, Mobclix today works with 25,000 developers and has access to quarter billion users. Meanwhile, many competitors quickly fell off even as the app market grew exponentially.

Armed with cash, a team, and a technology platform, the next step was implementing guerilla marketing tactics to achieve viral growth. “We offered developers an opportunity to win $10,000 from Mobclix if they made more money with our competitors. When developers thought of mobile advertising, we wanted them to think of Mobclix,” explains Sunil. The promotion was a runaway success.

“The founders of Mobclix had an unusual ability to foresee mobile trends and divine what will work and how to attract customers,” says Shervin Pishevar, Managing Director of Menlo Ventures and a early advisor and mentor to the four. “In the hyper-speed world of startups, you are making a million decisions a second. These guys knew the right ones to make and didn’t miss a step.”

Velti: Going global

2010 was a banner year for the mobile advertising industry. Apple acquired Quattro for $300+ million, while Google acquired AdMob for $750+ million. “When you have over $1 billion of M&A activity in an industry, you know you are onto something. We were very excited that we were generating revenue and had so much market momentum. We were solving a real problem and just got the market validation that we needed to take the company to the next level,” says Sumit.

In early 2010, the Mobclix team had a decision to make: raise a large round of capital or accept one of the offers from strategic companies who wanted to acquire Mobclix. Having come so far together, the four were determined not to let their early success destroy their partnership or compromise their commitment to the company’s founding vision. Their dilemma was a familiar one for many entrepreneurs: does ultimate success have to mean selling out? Can a company win its market without losing its soul?

One of the companies in the running to acquire Mobclixwas Velti,a dominant player in the mobile ecosystem in Europe now poised to go public on Nasdaq. Through careful scrutiny, the founders determinedthat their platform and company culture complemented Velti. For Mobclix, Velti offered the strategic, technical, and business resources of a large, well-established company. Already the leader in mobile monetization outside the United States, Velti would gain a large customer base for North America. Together, the two companies could be greater than the sum of their parts—the sign of a strong marriage.

“Mobclix provided Velti with a catalyst to the emerging smartphone application space. Between the technology and team, we were very fortunate to be working with the guys at Mobclix,”says Alex Moukas, CEO of Velti.The synergy allowed Velti to extend their mGage Platform into the largest multi-channel monetization platform for today’s top brands, agencies, carriers, and vertical markets globally.

Fast forward 2012

Having joining Velti following its acquisition of Mobclix, each of the four quickly rose to key leadership positions. Krishna Subramanianwas promoted in 2011 to global Chief Marketing Officer at Velti. In this role, he drew on his experience as co-founder and general manager of new business at Blue Lithium, the world’s largest behavioral targeted ad network, where he had pioneered key elements of behavioral targeting such as retargeting, predictive targeting, and SIP. Along the way, Krishna also developed a patent-pending technology for mobile analytics and monetization.

Sumit Rai formerly CEO of Mobclix managed finance and led corporate development and strategy; in 2011, became Velti’s global Chief Development Officer. He previously served as managing partner of Venus Capital's Private Equity Group, which focuses on investments in India, and as a principal at Riverside Partners, a leading lower middle market private equity firm.

Sunil Verma, formerly head of daily operations and business development for Mobclix, assumed the position of general manager, exchange business line for Velti in 2011, and rose to Chief Business Development Officer in 2012. This role builds on his recent experience as a partner in Venus Capital's Private Equity Group, where he focused on investments in digital media in the U.S. and India, as well as his time with Gabriel Venture Partners, a leading growth equity firm, where he assisted with the firm's investments in digital media, software, and international investments in India. Like Krishna, Sunil has a patent pending on mobile analytics and monetization.

Vishal Gurbuxani CTO of Mobclix was promoted in 2011 to global Chief Technology Officer at Velti. He was ideally suited for the job, having worked at Accenture as part of a select group of 150 researchers and consultants out of 250,000 employees, focusing on digital media, mobile, big data, content optimization, and predictive analytics. Over the past 15 years, Vishal has worked in five startups, participated in three successful exits, and made numerous angel investments in innovative advertising companies, medical enablers, hospital 3.0, and companies promoting social good. Working at the intersection of technology and business, he has also filed numerous patents on predictive monitoring, remote monitoring, diagnostics, advertising, mobile analytics, and monetization.

Giving Back to the Community Is the Epitome of Success

As Krishna, Sumit, Sunil, and Vishal focus on helping grow the mobile powerhouse that is Velti, the company is always looking for top talent to drive its continuing global expansion. More information can be found on Velti’swebsite under Careers. “We are looking for the best talent around the world. We are committed in helping lay out the infrastructure for what will allow big brands and agencies to reach a mobile audience like never before. We love when we get amazing people to apply. Please don’t hesitate,” says Vishal.

Outside Velti, the team is committed to giving back to the South Asian community as well as helping to guide entrepreneurs. “Nothing feels better to me than giving back to the community that has given me so much. I often tell people, my network is theirs,” says Sumit. The group’s members sit on numerous boards and have made a series of angel investments, and speak regularly on panels including mobile, advertising, data, entrepreneurship, and innovation.

The four horsemen continue to be excited by the innovation and disruption in the environment we live in today. “The four of us want to leave a legacy that helps impact humanity in a positive way, and we are constantly looking for the next wave to disrupt,” says Sunil.

From the beginning, the strong partnership and shared vision of the Mobclix team has been essential to their success, and they remain mindful and appreciative of the strong connections and values that have brought them this far. Krishna, Sunil, Sumit, and Vishal would not be where they are today without the support of their family, friends, and loved ones, and for that they will always be grateful.

Founded: 2008

Focus: The mobile industries first monetization platform for Smartphone Applications. Mobclix was acquired by Velti and is focused on monetizing all mobile content.

MobclixFounders: Krishna Subramanian, SumitRai, Sunil Verma, and Vishal Gurbuxani

Headquarters: Palo Alto, California

Investors: Angel Investments from few Angel Investors.

Clients: Large Brands, Agencies, and Leading Smartphone Publishers

Learn More: www.velti.com

Email: info@teaminresidence.com

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