Ajit Mohan, Vice President and Managing Director of Facebook India chats with Amit Somani, Managing Partner Prime Venture Partners.

On this episode Ajit talks about his intrapreneurial journey at Hotstar and Facebook’s Vision for India.

Listen to the episode to learn about

1:42- Building Hotstar as an intrapreneur

4:46- New culture needs new heroes

8:24- Ajit on building distribution

12:57- The emotional and cultural evolution of the Indian consumer

18:08- The willingness of the customer to pay

20:35- When ads are not seen as an interruption

22:34- Measuring the success of engagement

23:49- Ajit on Facebook’s vision for India

27:41- Ajit’s thoughts on the role of Jio

Read the complete transcript below

Amit Somani 1:21

Welcome to the Prime Venture Partners podcast. Today we are delighted to have Vice President and Managing Director of Facebook India, Ajit Mohan, welcome to the show.

Ajit Mohan 1:30

Amit it is great to be here.

Amit Somani 1:30

Ajit I know before Facebook, you were also at Hotstar and the CEO for Hotstar. Can you talk to us a little bit about your background and your professional journey before we dig into details here?

Ajit Mohan 1:42

Sure Amit. I did launch Hotstar back in 2015. And then ran it for four years as part of a star, which was then a part of the 21st Century Fox. And before that, largely, my career was in consulting, I spent about five years in Southeast Asia, with Arthur D. Little and this was work in the early years of 2G and 3G, largely in Telecom. And then I spent five years with McKinsey & Company largely working for media clients out of New York.

Amit Somani 2:15

Wonderful. So there is this nice quote that often gets talked about within the context of startups, that the battle between startups and incumbents is whether the startups get distribution, before the incumbents get innovation, you obviously crack that big time as an intrapreneur at hotstar. So can you talk to us about that journey? Obviously star, and subsequently Hotstar had a lot of distribution, but to build a killer product, and to build that audience, maybe take us through some of the early learnings and the journey there.

Ajit Mohan 2:46

Of course, I think, in many ways the big innovation for Hotstar, was building a challenger company inside what was then a massively successful incumbent, by 2014, Star had become the largest media company in India, with a pan India presence, there was presence in television, movies, and sports. So in many ways, the idea of building a challenger product in Hotstar, which was focused on a product first and not content first. And then the very fact that we could nurture and build out a hotstar, which, in many ways, was challenging all of the tenants of the existing business I think that was innovation.

And I would argue that while we benefited from the massive content portfolio of the star network, we had to build distribution from scratch. So I think the big learning and I do think, in the media world, and especially if you circle back to 2012, to 2014, most media companies around the world had not embraced technology, or streaming as a core part of their strategy. And I don’t think in many ways the star was ahead on that front. And then having the wisdom and the courage to create an entity that in many ways could challenge the traditional business. I think that was innovation.

Amit Somani 4:16

So many interesting things you said there. And I want to unpack a couple of them. So one is just the cultural challenge. You were in one of the most successful media companies. And to say that I’m going to build a challenger product first mindset offering, talk to us about some of those challenges. And the second thing, which is almost hard for me to believe, is you said you had to build a distribution. Obviously, you would get benefits from being on the shoulder of the giant. But maybe both of these things, culture and distribution.

Ajit Mohan 4:46

Of course, and I think Amit culture, in my mind, had two elements, right? One, as is now almost a cliche. In media companies, content is king and that also means that creators and content makers are kings. So when we started hotstar, I think it was a big shift to recognise that it was going to be product managers and engineers, who are the heroes. And I don’t think we started off on day one recognising that to be fully honest. I think when we started the journey, and in many ways, there was a precursor to hotstar starsports.com, which started streaming from late 2012. And I do think we started this journey carrying all the assumptions of a classic media company, the emphasis was on content.

But I think we recognise that we weren’t going to build a product that was loved only if we had a shift to keeping product and technology at the centre. And that did mean culturally, a lot of times it becomes about who are the heroes who are celebrated, who are the people that you focus on when it comes to talent and recruiting. So that clearly was a big shift. And it did help that very early on it was housed in a separate bubble. And I think the kind of people that we hired. And I think one of the calls that we took was to bring in great talent from outside of the company, and in many cases outside India. And I think that helped retain the bubble. And there were people who were coming in, who were not vested, or too deeply invested in all of these successful learnings of what it took to build a successful media house.

In many ways, I think that connection between the traditional business and Hotstar was me, and I spent a couple of years in star, a year running the CEOs office, but no one really had a long track record of having built the traditional side of the business. And then we reinforced that bubble. I think that definitely helped. I think the other one was even framing of the mission. I think it was very clear for us that it was not just about building a new business vertical within Star. We looked around the world and one of our takeaways was that traditional media companies were not doing enough to transition to a world where technology and product was a lot more at the heart of where things are headed.

And therefore, I do think, and this is not just in retrospect, I think it goes even back to 2012 and 2013, we saw ourselves as pioneering a model for media, not just in India, but for the world. I think if you go back to some of the documents, I think the line that we used to use was there was an opportunity to reinvent television. And I think when you frame the mission as that, I do think it creates excitement that allows you to have people aligned around the larger mission, rather than just the task of building a business vertical in the context of a larger company.

Amit Somani 8:02

Understood, so switching gears to the topic around distribution, like I said, it’s hard to believe because you obviously have the star brand, you have content, you have ability to place the fact that hey, go get Hotstar here and there. Can you talk about some of the things that you did beyond that, to help you get the reach and the distribution that you guys build let’s call it organically or outside of the Star brand?

Ajit Mohan 8:24

Couple of things. And I think I would separate in the context of a streaming service, the content portfolio that we started with, and I think we’ve benefited massively from the fact that star as a company had IP, going back a couple of decades, in many ways, the precursor starsports.com came on the back of stars entry into sports, first with the acquisition of the Indian cricket rights with BCCI. And then the fox’s acquisition of the ESPN joint venture in Asia. So we definitely benefited from that content portfolio. But circle back to 2014. The challenge was no different from the challenge for every startup, which is that if you have a new destination, which was a web first and then mobile web and a mobile app, and I think we kind of pivoted to an app, which now in a seems almost self obvious, but Amit, you know that some of the conversations and debates that were happening around the world reflected in India as well, going back to 2013- 14, with starsports.com and the launch of Hotstar in 2015.

The question was, if you had an app, how did you make sure that people looked at it, they downloaded the app, they tested the service and that challenge was no different from that of any startup even today. And for me, a couple of things stood out. One is probably because the company came out of a media company, the service came out of a media company and there was belief in consumer marketing, and in many ways I think going back to the beginning of the last decade, it was a bit disconnected from tech companies that generally did not believe in the power of consumer or mass marketing. I think we did. And I do think it made a huge difference. And even in India, I think the framing of downloading an app, and I don’t know whether you remember, the first ad for Hotstar was to go solo. And I think the one before that in 2014, with starsports.com, was Kann, keep calm.

And I think it was very clear for us that we had to frame it not in a mechanistic and transactional lens, but we had to route it in what was clearly a cultural shift that was going on, whether mobile was increasingly, something that was the first screen for a lot of people, and there was clearly an element of appealing to the younger users. And both in Kanna keep calm in 2014, when IPL was streamed on starsports.com, for the first time, or go solo, in early 2015, when we launched Hotstar, as much of the message was, here is a destination for a certain kind of content, implicit to that message was a call to a different way of living, where it was a call to younger audiences first, where we were essentially saying, this was a screen made for you. And this is a product made for you.

And I do think that belief in consumer marketing, and the ability to pitch a message that was emotionally resonant with where people were, especially the first set of users who were likely to experiment with using the platform, I think it worked for us, I think that worked more than any kind of app distribution arrangements that we had with some OEMs. And of course, the other thing that worked was clearly leveraging the scale of the star network, because a lot of the content in the beginning was only star content. So clearly, there was an idea of pitching to that audience that you now had a complimentary destination where you could watch the same shows or the movies or live sports, and of course, with the benefit that it was not appointment viewing. So I do think the combination of the two helped, but for a tech company, I would say the differentiator was the emphasis on consumer marketing.

Amit Somani 12:24

Great. And that leads to the interesting point, which is, how has the Indian consumer evolved, both from that journey, and soon we’ll talk about Facebook and your new role with respect to their appetite for both newer mediums, newer distribution and other kinds of content. Yeah, cricket is of course, universal as is perhaps bollywood, but maybe talk to us a little bit about that journey. Maybe in the last three, four years before you left, in terms of the Indian consumer and how they had evolved, emotionally, culturally, being open to the Internet, and so forth.

Ajit Mohan 12:57

Couple of things to call out Amit. And I want to call out, because you referred to cricket. This is an interesting one. Today, everyone kind of looks at this and says, But of course, cricket would have succeeded. This was not the dominant wisdom in 2012, when we started streaming cricket. And in the beginning, there was a five minute delayed feed, which is available for free as an example, an IPL and the cricket, the digital rights were structurally only five minute delay, it was only much later that live was also available just in terms of the rights were structured. And there were two dominant schools of thought one was, no one is going to watch cricket on a small screen.

Because, of course, cricket is something that you only watch on a large screen. And second, no one will watch anything but live. And even a five minute delay will be a non starter. And both turned out to be not true. So I do think the hypothesis or the bet that we had, of fundamentally making the assumption that the size of the screen was not going to be a limitation, especially in India, where it was, and still continue to be largely a single television household and the fact that the mobile screen was going to be in such a huge empowerment tool for people in terms of having access to the kind of content or services or platforms that an individual was interested in.

And I do think we made that bet. And it played out. And of course, given the scale of cricket, that in many ways I think Hotstar drove. It is now today sort of assumed that of course cricket was always going to work. But going back to your question in terms of what has changed. I think the first learning is exactly that, that the mobile as a tool of empowerment has been even more deeply established over the last four or five years and two things have happened. And one of course, the cost of the device gone down dramatically. It’s no different from what you see in every part of the world, but there’s always been, I think OEMs and telcos have really tried hard to make devices more affordable. And a lot of that innovation and action has happened in India. And of course, for the same price point, the quality of the phones have gone up dramatically.

And the second one is the cost of data. And with what Jio started, and the other telco operators followed, I remember in 2013-14, it used to cost $8 an hour to stream video, today, it’s practically zero. So I do think that’s the second thing that has changed, the deep change in the mindset where, in many ways, people were so conscious of what they use data for because it was the ticking clock, it was every second every minute in a in a model where data was expensive and voice wasn’t, there was already innovation by that time in terms of incoming calls being free. So people felt comfortable chatting on the phone. But there was a lot of fear and anxiety about using data, that is no longer true.

And of course, when you’re not worried about usage, then obviously it kind of frees you from using your time and data towards the things that you value. That’s the second thing that has changed dramatically. I think the third thing is just and of course, this has been a virtuous cycle with all of the innovation that has happened between the different startups, new business models, and people’s openness to it, I do think that the supply of a whole set of new services, whether that is e-commerce, food delivery, access to urban utility services, and entertainment, obviously, I do think the comfort, with leaning on the mobile for a lot of things that you would do during the day, looking to the mobile for utility that virtuous cycle is now fully underway, both because of the supply and because with all of the innovation from startups with all of the capital from people like you Amit, it feels like we are exploring all parts of what could make for a healthy digital ecosystem.

I still think there are some pretty exciting spaces like education and health care, where probably we are at the early stages of innovation, I think that’s changed. And all three reinforce each other. The mobile becoming a very primary screen and data being available to 500 600 million people and no cost consciousness. And then the availability of a large number of services, all of those reinforce each other.

Amit Somani 17:41

Absolutely, Ajit one final quick question on this. And we should jump to Facebook, and then the rest of your story in the last few years, the willingness of the customer to pay has also increased. I remember having many conversations with you over the last four or five years about how you were pleasantly surprised with the ability and the willingness of the customer to pay for what would deem to be otherwise sort of free content on television or whatever. Can you talk to us just a little bit about that? And then we’ll switch gears.

Ajit Mohan 18:08

Yeah, I think it’s still early days. And I think even Hotstar I think looking at it from the outside, you can clearly see a lot more emphasis on subscription. And I have a couple of thoughts on this Amit. One, obviously, as any market matures, like we have seen everywhere else in the world, and you do see as people get more comfortable with services, the trust that works with service and the availability of multiple payment platforms, you can imagine that there is going to be a lot of paid transactions happening. Well, that’s clearly happening in commerce. And it has also happened on the back of all the successes that I think UPI has made in the last few years.

My own experience with Hotstar, as well as the philosophy of Facebook as a company, is that I do think tremendous value in finding business models that can keep services free and available to the masses, clearly as a company, we believe in that. I think today, Facebook has managed to build platforms across the family of apps, which have more than 3 billion users a month because it is free. And we rely on advertising to make it sustainable. And of course, I genuinely think one of the biggest things about what we have done as a company is that the ads themselves add value to users.

And that is probably the big shift generationally that ads are not seen as an interruption. If you ask people they actually value the ads that are surfaced on the Facebook or Instagram feed, for example. And I do think there is power in that model. There is power in making a service free and making it available to as many users as possible and finding business models to sustain that. But equally, I think if I look back over the last five years, there has been fundamental innovation in the infrastructure in India around payments, that definitely makes it possible to consider and build business models that are around subscription, for example.

Amit Somani 20:07

Great. So let’s talk about ads and monetization through ads. And a lot of VCs, including ourselves, are a bit reticent because there is a very strong sort of Pareto curve where the likes of Facebook and Google, and others dominate the kind of head of that market. So if you’re a startup entrepreneur, which is our audience here, and want to build a sort of an ad supported business, like you said, go mass, go scale with a free product that adds value. How would you think about that?

Ajit Mohan 20:35

A couple of things Amit, I still think that if you look at the size of the ad market globally, I still think there’s a lot of value there for companies, and that includes maybe a new venture coming out of the valley, or it could be a new venture coming out of India, I think it’s fundamentally the real question to ask is, what is the innovation that you’re introducing, that allows you to make a pitch for the ads, because your consumers are valuing those ads, and you’re offering value to advertisers? I think the bar has gone up on ads from where it was five years ago, or 15 years ago. I don’t think it’s just about, let’s have a large number of people.

And, you kind of place ads, which probably is a model that has come from the broadcast television world, and I think digital, in many ways, positively disrupted that with essentially, I think back to sort of where I was going, the very fact that ads are probably not seen as interruptive. And the ads themselves add value to users. And I think that’s the bar now. So I don’t think a new digital venture can think of, let’s kind of create something that is free. And just because you know, there is a mass scale that necessarily adds value for users or advertisers, I don’t think you have to figure out, what is the value? How are you going to raise the bar that allows companies to use you as a marketing vehicle? And that allows users to derive value from the ads that they’re engaging with? But if you’re able to do that, I do think there is value then for even a new venture.

Amit Somani 22:20

Great and how do you measure the success of that? One, of course, is the classic metrics of engagement or click through or what have you, but that the ads themselves, if I may call them as a product are really engaging the user on a first principles or a first class basis?

Ajit Mohan 22:34

I would imagine it’s a couple of easy ones. One, marketers, I do think it’s interesting to see the evolution of marketing and the pace at which it is happening. And I think the big shift in the last few years. And I would almost argue with that. As cliche as it is, I’ve seen a big shift, even in the last six months is I think marketers who may have grown up with certain models of how to allocate money across different mediums are increasingly becoming quite ruthless in looking at return on investment, as the only criteria. And in many ways, discarding all of the old marketing playbooks and saying for every dollar or rupee that I’m putting in, what is the incremental value for my objective? And sales invariably tends to be a big goal. And for me, that’s the big question. I mean, are you building something that marketers love? And of course, marketers are not going to love it if consumers are not fundamentally deriving value from it.

Amit Somani 23:38

Can you talk to us a little bit about your vision for Facebook India, and what you see both on the consumer side and the advertiser side, over the next, three to five years? Like, what do you think will happen on both sides?

Ajit Mohan 23:49

Of course, if I step back and just think about what India means for the company Amit. One, I think you know this, both for the Facebook app and WhatsApp, India is where we have the most number of people on these two platforms. I also think because of who we are, and in many ways, we look at ourselves as platforms that are enablers for others, especially in a country like India, where Facebook and WhatsApp and increasingly Instagram are deeply immersed in the fabric of India.

If I pick WhatsApp, I suspect most of us start our day looking at WhatsApp and probably a message sent on WhatsApp is the last thing that we do before we shut off for the day. I think that kind of relevance and engagement means that our thinking is really how do we over the next 5,10, 15,20 years in a country where digital is clearly playing a big role in the economic transformation and how do we play an enabling role on that agenda? And for us, we think about that as largely five pillars.

One, given who we are, there is an agenda of expression. And it ties in with the democratic ethos of India, whether it’s the public expression of platforms like Facebook and Instagram, or a private messaging platform of WhatsApp, we have a role to play. And a big part of what’s happening there is around video, video of all formats has seen a massive sort of, I don’t mean just in the numbers in terms of explosion, but explosion in terms of creativity, explosion in terms of a new generation of creators coming into play, with short form video, for example. So there’s a lot of energy there.

And we see ourselves as really India, kind of leading a lot of the work that we’re doing in video. The second one is, we have an agenda of entrepreneurship and an agenda of small business that is particularly relevant in India. In a country where 10 to 12 million people enter the workforce each year, we know that the agenda of job creation is not going to come just from large companies, it’s fundamentally going to come from the 1 person and the 5 person and the 10 person entrepreneur. And Facebook as a company has always played a particular role on the small business agenda. And we see ourselves as playing a big role in India as well. And of course, part of the reason for our partnership with Jio goes to them. The third one is, we do believe that a world in which we get approval for payments on WhatsApp, that can become a big enabler for the agenda of financial inclusion.

The fourth one is inclusion more broadly, even though we have had more than 400 or 500 million people who have come online in the last four years, only about 35% of that is women. So as excited as we should all be about the massive shift in access, and that is probably more than in any country, including China, we do think a lot of us can play a positive role in breaking the gender imbalance on the internet. And the last one of course is, given the diversity of India, we do believe that there’s an opportunity for India to be a testbed for the world that we can create product innovation here, that involves not just in India, but from in many other countries around the world.

Amit Somani 27:13

Absolutely, completely agree with that we often talk about startups that innovate for India can innovate for the five other billion people in the world that are kind of in the emerging economies .Can’t but not ask the question about Jio, the big white elephant in the room, obviously, Facebook invested in Jio, as did Google and Microsoft, and seemed like almost everybody else during this last six, eight months. What do you think about the role of Jio, I mean, they, of course, got everybody on the map in terms of access and cheap data. Any thoughts on that?

Ajit Mohan 27:41

Going back to the beginning of this conversation Amit, many of the themes that you’re hearing from me, a lot of us who have lived through the 2015 to 2020 phase, know the particular role that Jio played in fueling the digital economy here, I think with fundamentally the positive disruption that Jio did with 4G, they were able to, essentially for the 400 or 500 million people who came on to a high quality mobile broadband internet in India. And in many ways, I think, for those of us who know the company, I think people are aware that we have believed in the power of people having access to the internet. And therefore I think there was an alignment, in values fundamentally believing in the role of bringing the internet to more and more people. And that agenda continues in India.

That was a point of excitement. I think the second one was, we did not see Jio as a telecom operator, we see Jio as fundamentally building a platform company in India. And the announcement that we made about the partnership between WhatsApp and Jiomart gives an example of the value in this investment and the partnership, where we do believe that the two companies can work together to open doors on new frontiers in the digital economy in India, that can obviously be good for the two companies. But as well as for the broader ecosystem. The partnership between Jiomart and WhatsApp, we believe can be a game changer for the Small Business ecosystem in India.

And what we’re trying to do there is trying to make it easy for people to order from within WhatsApp and relying on the tremendous effort that Jio Mart is doing to digitise this small business in India with the focus on the Kirana the local shop at first, and that’s going to be good for the economy. It’s going to be good for small businesses. But I think it gives you a sense of why we were leaning in on this investment and the partnership because we do believe that the two companies together can fundamentally light up the digital ecosystem. That’s going to be good for India more broadly.

Amit Somani 29:52

Wonderful. Thanks a lot to Ajit for taking the time, I really appreciate it. Lots of interesting insights both from the Hotstar to Facebook and now investment in Jio. Thanks again for being on the Prime Ventures Partners podcast.

Ajit Mohan 30:03

Thank you Amit. It was great to have this conversation.

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