Sramana Mitra: Gaming has been a very big advertiser base for mobile apps. I don’t see any reason why gaming would not be a good reason to go into.
Zain Jaffer: Investors were not very keen on gaming businesses. The idea was these games are not sustainable and was a hits-driven business. Our unit economics showed that when customers spend $10,000 with us, they’d make $30,000 back. We became a very important piece of the infrastructure. These games depended on our platform to gain users.
Sramana Mitra: Which three years was the climb in revenue?
Zain Jaffer: $850,000 was in 2011. Between 2012 and 2013 was when the revenue started to climb well north of $50 million.
Sramana Mitra: In 2014, when you were doing upwards of $50 million, what percentage of that was coming from gaming?
Zain Jaffer: Probably 95%.
Sramana Mitra: When did the acquisition happen?
Zain Jaffer: Late 2019. Before we talk about that, here’s the other thing. When we had the $50 million, it was heavily concentrated with just a few customers. We had too few large gaming customers. I had to do something that was uncomfortable, which was focus on the quality of revenue.
We stopped trying to grow our three largest accounts and tried to diversify and get similar accounts. The year after, the growth was slower, but it was very respectable. The year later, we had a much more secure business where our largest customer wasn’t 60% of our revenue. Our largest was perhaps 10%. That’s one of the key things to have a sustainable business.
Sramana Mitra: Absolutely. By the time you went through the acquisition, what were the metrics? How much were you doing revenue-wise?
Zain Jaffer: We haven’t disclosed those metrics, but the business is north of $400 million in run rate and very profitable. The product had cemented itself as a critical part of the app ecosystem.
Sramana Mitra: By the time you got acquired, was it still mostly gaming?
Zain Jaffer: It’s more diversified. Other verticals started to open up. Shopping applications became a large segment. I’d still say 70% is gaming.
Sramana Mitra: Are you still running the business?
Zain Jaffer: No. The company has been acquired. Now I’m running my own investment fund.
Sramana Mitra: In the Vungle story, what role did Gokul play?
Zain Jaffer: Gokul sat down with us at the worst of times when we felt that no one believed in us. He made some introductions for us. He invested via Angel Pad. They take around 5% to 6% stake in each company when you get into an incubator. He helped with an advisory perspective.
Sramana Mitra: What are your parents saying these days?
Zain Jaffer: We ended up raising money from Google for our C round. McKinsey was involved in the acquisition. My parents didn’t understand it in the early days. They didn’t quite understand the concept back then.
Sramana Mitra: It’s a fun story. It was great talking to you.