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Building India’s answer to Ogilvy | Pratik Gupta @ Zoo Media
293 Plays2 years ago
If you search the top 10 advertising agencies in India, you'll find that they're all subsidiaries of international companies. There isn't a single agency on the list that is entirely owned by Indians. Zoo Media is on a mission to change that narrative. Pratik shares his decade and half long journey of building a marketing agency from scratch and how they are now on track to build a global ad agency network from India.
Additional links:-
1.Digital Marketing Mavericks: Zoo Media's big bet on hyper-specialisation
2.Zoo Media partners with independent agency collective - Dawn to launch global office in New York
3.The Zoo Media Network bags creative and branded content mandate for Kingfisher Premium and Ultra
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Transcript
Introduction and Background
00:00:00
Speaker
Hi guys, I'm Fethi Gupta, one of the founders of Zoom Media and Foxy Boron.
Understanding the Advertising Industry
00:00:16
Speaker
If you Google the top 10 advertising agencies in India, you will see that all of them are subsidiaries of foreign companies. There is not a single agency in the list which is 100% Indian
Building Foxy Moron: The Early Days
00:00:27
Speaker
owned. In this conversation with Pratik Gupta, the co-founder of the Zoo Media Network of Agencies, your host Akshay Dad digs deep into the business of building and scaling marketing agencies.
00:00:38
Speaker
While still in college, Pratik and his friends started doing marketing projects for companies which led to the formation of Foxymoron, which is among India's leading creative and performance marketing agencies. In this freewheeling conversation, Pratik shares his decade-and-half-long journey of building a marketing agency from scratch, facing near-death experiences and how they are now on track to build a global ad agency network from India. Stay tuned and subscribe to The Founder Thesis Podcast and any audio streaming app to learn how to build global businesses from India.
Personal Journey and Career Shift
00:01:15
Speaker
I grew up in a joint family of full, red blood, pajari family, principles, values, respect. These were things that we would get told off in, right? And I am hyper competitive as a human being. Like for me, everything is, have we started playing a game? Because playing a game is where my natural switch on button is.
00:01:34
Speaker
So my grandfather came from Jabbu in Kashmir. His house was next to what is currently POK and we had farmland over there which is now under a big dam. I really wanted to do biotechnology. I went to a college in Singapore and a full scholarship to do it.
00:01:49
Speaker
I stayed back and I didn't go and I started doing management. So I didn't have a fear of paths, but I very quickly knew the skill sets I was very good at. I was good at lots of things. I used to keep joking about Jack of old grades, master of none, but like really advertising is one place that
00:02:08
Speaker
that really appreciates that.
Initial Projects and Learning Experiences
00:02:11
Speaker
Like, I have the ability to look at things from a different lens. Sir, I can see that just before starting Zoo Media, you were working at Balaji in a sales run. Why did you decide to take up a job while you were still studying? I started Soxie when I was still studying. I went to Uruvaya money in the 11th and 12th, which I think really shaped why I ended up becoming because I.D. was a course that changed my thinking.
00:02:33
Speaker
versus what we learn from a rote point of view. So when I went back to college, it just seemed like a breeze. I was like, listen, I can study for two days before the exam and still make it and nobody will feel a pinch. And I really wanted to do something with my thigh. And we had these college festivals and I ended up selling the title sponsorship to Banaji Direct Films.
00:02:52
Speaker
And I really didn't think that they should have bought it because it made no marketing sense for them to have bought it. So I waited for that check to clear. And then I called up the guy and I said, bro, why did you buy this? Like I really want to understand like just curiosity. And he called me in and he gave me a job when I said, cool, I'll do it. Like, like there is no, there's no harm in learning. And I spent about three to six
00:03:17
Speaker
It was not really a sales job. It was developing new IPs and then sending them internally. So it was IP development. And I promise you, I didn't know what IP meant. I did not know what intellectual property meant. And for me, it was just about coming up with new creative concepts with the assets that Manaji
Founding Foxy Moron: From Idea to Reality
00:03:34
Speaker
has. At that point in time, the actors, actresses, cheapest production jobs in the country to produce content.
00:03:40
Speaker
So there was lots going on for Banaji. So you were pitching show ideas to people there. We started off by doing like a tandem division. Then we wanted to do a few concerts. We wanted to do earth life. We wanted to do other things apart from what their normal programming is. So this was like a division for new initiatives as opposed to anything. But it was great learning differs.
00:04:05
Speaker
I got exposed to so many things, but also the favourite thing was that 7.30 PM, when we had to go and sit and watch audition tapes. I think those are the funniest things that you can ever watch. Was that the trigger for starting Foxy Mora? Like that's did that, but Foxy Mora had no trigger. Legitimately, there was no reason. So my business partner and I, we went to Pakistan together for a model United Nations. So we took the Samjhauta Express, spent all of 37 rupees.
00:04:31
Speaker
and when the land rode from Delhi to Lahore. And it's very intimidating with the kind of history our countries share. It was not hostile by any means when we went there, but preconceived notions, I mean, there were 12 or 14 of us, and all of us became very close because those two or three weeks, that really got sweet and we were fairly very close and we continued to remain in touch.
00:04:54
Speaker
We did a lot of college festivals. He was in HR. I was in Sydenham. So we used to keep competing. And we had a common group of friends who were the people that we went to this, Lahore United Nations. And basis that, I think that summer, I just gave him a call and I said, listen, let's do something, boss. This internship is not going to cut it, man, because in the time of where, I mean, digital was nothing, honestly, back then, but in the time of the internet, as we used to say, people are still teaching us how to send fat sales. And that's what they're expecting us to do an internship. Let's do something.
00:05:23
Speaker
a little bit more constructive. He used to work as a copywriter in Indian Express or as a journalist in Indian Express. He had a few things happening. Like there was another business partner of ours who used to make websites.
Scaling Challenges and Growth Strategies
00:05:35
Speaker
We said, we'll just come together for these three months and see where it goes. Like our indent was not to start a company. Our indent was not to do anything. Our indent was just to have a productive summer.
00:05:45
Speaker
But, you know, so we come from a loyal family, and I say this often, we either sign a partnership deal, like he said, if you're doing it, then we must formally sign something, and it really triggers something in your head, like signing something really authenticates the depth of what you're getting into.
00:06:02
Speaker
I think that if you would have not signed that piece of document, you know, we would have all just disbanded at the end of three months and come back. But, you know, when we signed that piece of document, it almost felt like, shit, we're running a business. We're running a company. And I promise you, I'm not making this up. We had no business plan. We had no services. We just had a very cool name and we knew we wanted to do something in communications.
00:06:25
Speaker
And that's about it, you know, and this was before entrepreneurs were cool, the startup ecosystem, unicorns, none of this stuff was even a thing. So we didn't walk in there wanting to be entrepreneurs. When you say you wanted to do something in communications, I mean, you are saying this with the benefit of hindsight, like an 18 year old kid doesn't know communications, like what is that feel all about? Like, did you have some idea that what you want to pitch and, I mean, essentially you wanted to
00:06:53
Speaker
get some money from doing a project. That's what it was. I, for the longest time, till the time I realized that I'm hiring copywriters, like for the longest time thought copywriters are lawyers. Like some of the projects that we picked up, there was this guy called Ranjan Singh who was the marketing head at PBR and he told us that, will you make the film poster for this new movie that is coming up?
00:07:16
Speaker
And confidently, we won the mandate. And I swear, we walked out and we made calls saying, was that like the very first deal, the PVR deal? No, the first deal was this water filter of Suveer, the friend in college. And they were trying to create a centre which did not require electricity. It was called Jaltara. And then we did like hoardings for this dance studio in Bombay called Arts in Motion.
00:07:40
Speaker
Those were the two first projects. I think we still have that video that we made for Jalkara. It was the most atrocious looking video I have ever seen or made in life. Another donated post before and after. So it was a silly dolly six feet something.
00:08:00
Speaker
So he was holding the water filter at the hanging garden. And the only thing that we carried with us was ID cards from college because otherwise we were allowed to shoot in public places. So even if the cops came, we would basically face our college project.
00:08:15
Speaker
It was very horrible in hindsight, but we had the ability to make mistakes. There was not consorted pressure on us to immediately deliver, like even the PDR project. I swear on God, I walked out of that room after winning that project and said,
00:08:34
Speaker
Dude, how do you make a movie poster? I have no idea. I don't know what software it is to be used. I don't know anything that we need to do. But once we got it right, like we've worked very hard to deliver the best version of the book that we could have multiple steps of our time, right? Yes, we would oversell, overcommit, over everything. But in lots of cases, the reason that we survived so long is because we've also overdidibbled.
Digital Transformation and Client Acquisition
00:09:00
Speaker
So the first few projects were essentially promotional content. Like it could be a poster or a video, basically like that was the kind of work you started doing. And how much did you start earning that? Like was earning enough for you to decide, okay, let's do this full time. No, no, no.
00:09:15
Speaker
We didn't earn substantial money for I don't know how long. I don't think we took structured salaries till 2013 or 2014, something like that. We would pay ourselves in chunks. So if there is Diwali, we would take like 50, 60,000 bucks home. So we were making enough to
00:09:33
Speaker
I guess we were making enough to sustain. We could afford our own lifestyle and our lifestyles are nothing crazy because we would be spending 99.9% of our time in office. Tell me about how the business grew. You started as a bunch of friends taking on projects. How did that grow into you having an office, you having a proper process for getting work or delivering work, having team members?
00:10:00
Speaker
That journey, our first team members were people who studied with us. We paid them in pendrives, we paid them in, like, like, canteen treats and we paid them in. Pendrives are very expensive back in the day too. They used to cost a lot more than they cost even today.
00:10:16
Speaker
We were also these supremely enthusiastic kids. We had this 100-site digital presentation in early 2009. And everybody who was in our classes, their sisters or brothers were working in MNCs. They were working in different companies. We would say, hey, we want a one-hour meeting. Hey, we want a two-hour meeting. And we would go and present this 100-site deck on what they should be doing on digital.
00:10:41
Speaker
And they would just say, okay, go, I don't know what the hell you're talking about. But we became the first access point to a lot of these big companies who understood digital through our lens. So even though we didn't immediately get work, people started calling us and said, Hey, listen, you made a presentation to us on digital. What can you come back and now tell us?
00:11:00
Speaker
Global is giving us pressure. Internationally, digital is becoming a massive trend. What is the C? Can you please tell us what we need to do on digital? And that's how we started to bag our first few clients. And once that client base started to come to us, we were the ones making the most number of case studies. And honestly, because we didn't come from advertising backgrounds, we didn't even know advertising structures. For the longest time, we didn't have a client servicing team because whenever we interviewed client servicing people, they were too expensive.
00:11:27
Speaker
So we said, bro, we can't afford these people already. Like in the sense that the creative person is the client's missing person. You know, so we did a lot of these jugadu things. I remember L'Oreal came to us and said, we want to put you on a retainer. So we said, cool. Then we called everybody we knew. He said, how do you make a retainer boss? Like, what is this?
00:11:46
Speaker
What is the process? What the hell does the retailer need?
Strategic Partnerships and Independence
00:11:49
Speaker
So everything for us was an organic journey where we learned, we built a lot of systems, we built a lot of processes because we had no other option. How was the business doing? Like in terms of what kind of revenue did you make like 2010, 11, 12?
00:12:05
Speaker
Probably under a crore of rupees. We were doing it in 2009, 2010. I think 70, 75 nights. I think we did about 1.8 to 2 crore rupees in 2010 and 11. I think by 13, we were handling yachts of media mandates. So we started to scale business then. Like in 2013, I know we were doing 14, 20 crore rupees of business.
00:12:25
Speaker
What do you mean by media mandates? We were buying media. L'Oreal was a media business. Castrol was a media business. Some part of the media that we were buying for category. So we were buying YouTube views. We were buying Google AdWords. We were buying Facebook AdWords. So we were doing a lot of the digital media planning and buying for these companies. And therefore the billing went up fairly, very high.
00:12:48
Speaker
for all of these lands in 2012-13 is when men started to side-lock it. Between 2011-2013, I think we moved from 70 people to 300 people, and we used to have ganas in the office place that was our industrial mill, and we got in with one gana over there in, I think, 2011 or 2012. And by 2013, we had about 14-15 of them on the same floor. There were no investors that you had to answer to.
00:13:18
Speaker
We still don't have an investor structure. We are still self-funded. We're set debt free. So we've taken the 64,000 rupees and grown it into a 150 odd crore plus business. We've completely just reinvested everything. I don't know what an investor pressure looks like. Like, I mean, I don't know what any of those things actually even me and
00:13:39
Speaker
Our ability to make these mistakes, learn, unlearn. In 2015, we went back to 180, 200 people because we were overstaffed. We were, you know, not an efficient organization. We had too many people in the junior and the senior ecosystem, not enough leadership. And how much can I do? How much can my business partners do? Like at some point in time, the system needs to work. And that's when we understood leadership. We understood culture. We were able to put a finger on what kind of an organization we were building.
00:14:08
Speaker
So these 300 people that you hired, they were like content creators and probably people who would do media buying, like people with some sort of analytical bent of mind who will look at analytics and manage ad spends, and people who have a creative bent of mind who would create.
00:14:24
Speaker
creative people, designers, copywriters, account management people, media planning people, SEO people, like storage people, they were buying specialists. We had started business development teams. We had started HR teams. Right then finance became a part of the process because suddenly you could not just go to any software which they view, fight free bills and make another one and send it over there and change it in a PDF editor. All of those things are not possible.
00:14:53
Speaker
So a lot of the sub-functions of what we call corporate costs and corporate overheads started to organically happen because the business became that big that we really had to hire these people. And that was another whole journey. And then early on, 2013-ish, we were starting to get approached by all network agencies who wanted to buy us because they were not able to win those businesses back from us.
00:15:17
Speaker
all the laurels, the castroles of the world, they were not able to win those businesses back once they were with us. None of these companies wanted to move to them again. So they said, in their typical corporate thing, if you can't win it, then buy them. So when that started to happen, and then people wanted to do diligence, we have to submit our numbers in a certain way. So automatically, we have to reorganize our business. I'm very fortunate to have come out learning those lessons.
00:15:43
Speaker
So tell me about hiring then. What was the way in which you started hiring and what worked, what did not work? We were the coolest place to work in. So all of the great talent that we knew from college, two or three batches, our junior, our batch, one or two batches, our senior, they all came and worked with us.
00:16:02
Speaker
Like we have hired people because our first office was next to Stirling cinema in Bombay, right? And our first office didn't have a bathroom. So we used to go to Stirling to pee. And there was this one guy called Neville who worked with us, I think eight or nine years. We know him since college. Neville had come to see a movie at Stirling. A couple of us had gone to pee. We met him. He was walking out of the film. We dragged him by the corner, took him to office.
00:16:29
Speaker
And two days later, he joined us and he was with us for nine years. We were not doing the conventional. So people were already interested, already knew of us, right? And we used social media to really progress that. Did that approach scale? Like your approach was a lot based on instinct and gut. Like you liked somebody you thought he's a cool guy to spend time with. Does that scale?
00:16:50
Speaker
It scales, but after a certain point, you need to go back and figure out what is the method of that gut. There is a methodology that even your gut follows. What we call gut is just our experiences telling us to do something or not to do something. If you actually track back, and hindsight is always 20-20, and you try to figure out this methodology behind the gut, it becomes systems and processes that are able to institute inside the organization.
00:17:18
Speaker
Because I'm not going to be there, I don't have all of the information to use my gut to make these decisions at scale.
Leadership and Team Dynamics
00:17:25
Speaker
So what is your hiring philosophy? Do you hire purely for value systems and functional fitment or do you hire for relevance of experience or do you have some sort of assessment of skills in the hiring process?
00:17:39
Speaker
I mean, we have a skill assessment. We have tests for every department that exists. My personal hiring philosophy is very different of that of the organization. I hire more for the emotional skills as opposed to just the hard skills. For us in lots of cases, great experience has not been able to deliver at all. Like we've not, we've actually had the opposite problem. Experience has
00:18:04
Speaker
more often than not backfired in our systems. Like they have not been able to understand the culture, they have not been able to become one. And I think that with today's workforce, having a very high IQ is more important than having a very high IQ. And I keep telling this to everybody, when you come into leadership roles, it's not what Akshay can do or what Rati can do individually. You arrive at a leadership role because
00:18:30
Speaker
Nobody is questioning your ability to deliver. What you're being paid for today is for you to get other people to deliver at your standard at the very least and at the organization's standard as a step up from there. If you don't have the ability to raise an army, right, to get the army to work with you, work for you, to really belong to you,
00:18:50
Speaker
this generation will cancel. So, how Suveer and I do it is that Suveer is fairly black and white like that. So, he goes and he has the technical rounds as we call it. And I have a culture and EQ kind of around with the person. So, I have a completely different set of questions. I want to know that person's journey. I want to know how he deals with the people in the system. I want to know how he deals with authority. I want to know what he thinks of leadership.
00:19:15
Speaker
I'm asking those softer aspects, but I also, because I am that emotionally charged as a person, I also tend to believe that there is room for growth with a lot of people, which sometimes I shoot myself in the foot and therefore make poor hiring choices.
00:19:32
Speaker
So you told me you grew too fast around that 12, 13, 14 period and eventually you decided to scale down the headcount. What were the symptoms that you were saying that you're not able to cope up with the growth and what did you learn about growth from that experience? We were too sad, Takshai, like we had.
00:19:48
Speaker
a lot of people doing similar or similar roles. We didn't have systems, processes. We didn't have the ability to know what these people were actually doing in the system. So we grew fast because for us, we used to hire 10 people and we had worked for 20 people.
00:20:06
Speaker
The problem is that the junior executive, the manager and the person who was heading the department, all three of them have joined at the same time. So it's like almost like the blind leading the blind. What were the symptoms that you needed to cut? Was it a profitability that you saw your profitability is coming down or was it more like a gut feel that we have too many people?
Adapting Services to Market Changes
00:20:25
Speaker
No, profitability came down. The culture became very impossible. From knowing every person, we were now walking into rooms where we didn't know people, where we didn't know why they were there, where we didn't know what business they were servicing. And if we don't know it at that size and scale, they don't know who this organization is. And we're not a manufacturing business. You have 50 more people to do it.
00:20:49
Speaker
They are very culturally sensitive. If you have a good culture for those 3 or 5 years in an advertising agency, the work is just 150 times better. So what we were seeing is that there were cohorts of great work, there were cohorts of average work, there were cohorts of people who didn't give a shit.
00:21:08
Speaker
So what's had to happen, they said, we needed homogeneous ways of working. We needed a homogeneous kind of people in the system. It is easy to run a 40-50% organization, Akshay. It's not difficult. Out of those 40-50 people, even if you have 30% who are phenomenal, right, your organization can be amazing. In today's day and age, more than ever, because the connective of these people just don't come together. But now that you have a lot more people who are
00:21:35
Speaker
average, your organization is average, right? So we had to reclassify, like I said, get HR, get finance, get processes. So it was a complete recalibration. And yes, because we were recalibrating a lot of these revenue per headcount profitability, what is the team costing us? What is my overhead cost? What is my salary cost? What is the average salary of a media team? What is the average salary of a social media team?
00:22:01
Speaker
All of these things started to come out because we were asking the questions. So it was just a reset button that we had to hit. And how did you do the cutting? Not necessarily organic, but some of the people who just didn't make the cut, didn't make the cut. People were putting on their own. We also were having real conversations, honest conversations. We didn't have any Zoom messages.
00:22:22
Speaker
None of those. And I don't think that in our line of business, you can survive one of those lingering moments. You can't be looked upon as an organization that truly is that harsh. And we were harsh. We were really nice and human about it. Most of the people who came back, they worked with us. Explain what the issue was.
00:22:40
Speaker
It was all right. And meanwhile, how was the business evolving? So you started with making promotional content for digital presence and then you started managing ad spends, digital ad spends for these brands. Just talk to me about the evolution of the services that you were into, which is also like the evolution of the space.
00:22:59
Speaker
So it was social media retailers, Facebook used to allow you to do these apps. Right next, you should do like a pixel app, you should do like these quiz apps. So you had the ability to use the tag feature to build apps. So really the app and the technology business, especially inside of Facebook to try.
00:23:16
Speaker
Social conversation became a really big thing for us. Our media practice became a really big thing for us. People were now asking for video content a lot more. Manager had friends became very big for us. Video production became a thing that people would ask for. Influencers we were doing since 2009, 2005.
00:23:34
Speaker
The term influencers was also not there when we started doing it. Then Google came up with this thing called Google class. We had a short experiment. It had hack doubts. And then there was, we did this one campaign I remember with the Google class, which I still have. So a lot of these technology interventions to grow communities, media interventions to grow communities, multimedia assets that you were creating to grow these communities really became very important. Facebook became big.
00:24:00
Speaker
Then Instagram became big. And then the entire overall strategy, right? Because now there was attribution. You had the ability to know what your cost for lead is. Now the media metrics of digital started to become homogeneous for everyone. Everybody knew what the CPM was, CPV was, and then moved from an education space. So more also, I want to scale this sort of a space, right? And that's where a majority of our people were also deployed for most of our plans.
Navigating Partnership Issues
00:24:30
Speaker
Okay. Okay. You told me that networks like bigger agencies were coming to you for acquisition talks. What happened? We had a spreadsheet signed with WPP since 2013 to 2018. We were 24 years of age and the numbers that were being spoken about were enough for a couple of lifetimes. So we were just like, dude, what's going on? Why are people giving us so much money? What the hell did we do with so much money?
00:24:55
Speaker
What does this mean? You had a term sheet signed from 2014 to 2018. It was a four-year period here. So four of us started Foxy, four partners. We started Foxy and two of them exited during this period. So we signed a term sheet and one partner exited and started his own agency and all of those rubbish things happened. Why did they exit before the sale? I mean, no, he signed the term sheet and exited. Okay. Okay. So the many would have come to them.
00:25:22
Speaker
Yeah, but there were non-compete clauses, probably didn't want a non-compete clause, also told us he's not going to be in the advertising business, wants to get away from the advertising business, but was obviously already working towards setting up his own agency. This was also when that 300 became 180, like around the same time when the other founders were departing.
00:25:41
Speaker
Coincidentally, Akshay, yes, but really that was not the reason why it became 300 to 180. So it was that a lot of change was happening. So for us, it became a whole period to make the change happen because really our systems and processes were not there. Were we ready to handle 300 people? By a long shot, we were not ready to handle 300.
00:26:02
Speaker
And obviously the WPP came and told us that we need to wait it out because our business is purely a people's business. So we need to know what is the effect on business, what's going to happen. There's that saying, would there be negligence on your part also that made him work away, like in hindsight.
00:26:18
Speaker
Actually, we walked away because what he said is that the system is not perfect, but we make the system. And if you've created a mess, you've bloody well put your head down and clean it up. I mean, if you ask me today, is the system perfect? I'll tell you no. If you ask me ten years from today, if you think the system is perfect, I'll tell you no. Because that's my job. My job is to make a better, more efficient, more coherent, better culturally sound organization. And I always keep
00:26:44
Speaker
finding newer and better ways to doing it. Everything is about a company when you play it. So it's always easy to start from zero, but it's very difficult to put your head down, grind it out, and really do what requires to clean the house. Cleaning the house is very, very difficult. Building a new one is very easy. When my second partner exited, he had some family issues and he had to exit. There was no other way out. So he exited and they said, okay, we'll wait for another two years.
00:27:09
Speaker
Then, like, both of these people became best friends and then we were negotiating, our shares were given to landlords. Every bloody thing happened that could have happened. I have never said these things publicly, but I think, yeah, I mean, I think it's time that everyone knows it was really done fully. Like, everybody's future was always hanging for those four years. We didn't know what the hell is going on. Are we doing the deal? Not doing the deal. We are committed because we signed a term sheet. So,
00:27:34
Speaker
He is negotiating greatly with WPP. Everybody is negotiating. I didn't know who was controlling my destiny. Like I was definitely not controlling my destiny, but like WPP was great about it. They were trying their best to, to ensure that this works out because we were integrated into their systems because
00:27:50
Speaker
For them to reinvent in the digital ecosystem, they needed people like us for us to learn systems and processes. We needed institutions like them because what would take us 5, 7, 8, 10 years to learn? We would learn in one or two years because they've already been through the grind. We spent the 45 years building the network of agencies, right? You look at another solution and you're like, dude, this seems so simple to implement. You implement it.
00:28:12
Speaker
Then two years later, you realise what are the flaws in those systems and then you go back to what these guys have done. But eventually we had to get rid of this, this baggage that was following us for the last four years. We're going to do this on our own. They clean our own house, get these guys to exit. You bought them out. There are the two co-founders. No, they just wanted copious amounts of money that didn't exist. So we're not, they still came to be shareholders in the company that doesn't exist.
00:28:35
Speaker
Oh, okay. So you started a different entity and then moved all the business there. That's what they did. That's exactly what they did. So I can't be held responsible for everybody's actions. So if that's the part you've taken, that's the part I can take. But during this time, you've continued to win business or was it impacting your ability to go and get business and grow business? We were growing a hundred percent year on year. We paid agencies and have become best in class.
00:29:02
Speaker
Business was never an issue outside. I don't know how many times I've already said it. Because you were going to be a WPP agency. That would have also allowed you to get more clients. Yes. We had a lot of clients that we built together. The day we told WPP no, then they rightfully took away all those clients from us. We came out of a whole WPP relationship. So we and I were very sure of the vision that we had. We chose GroupM because
00:29:26
Speaker
We understood media and we did a lot of media, but we were looked upon as a creative agency, as Hoxie. But we realized that creative and media has to come together in the digital ecosystem. And also, what we decided to understand, Akshay, is that at Foxy, we decided to become a 360-degree agency. Every agency during the 2013-1617 was trying to become a 360-degree agency, but you can't become a 360-degree agency and be best at everything you do.
00:29:55
Speaker
We would do 3-4-5 crore rupees of video work. But were we the best video agency out there? No. Like if you told me to go shoot something which is a 1 crore rupee production, I didn't have the capability of the chops to go it because it's a cash flow business. You can afford 70-80 lakh rupees or 60 lakh rupees of salaries. After that, you're always investing basis cash flow.
00:30:17
Speaker
versus when you are building businesses, you need to build businesses' bases in this way. So when we built this network structure, we realized that these verticals of excellence has to build, acquire, or do joint ventures with. And these are formal associations, right? These are not these business development agreements that most agencies have. These are equity positions.
00:30:40
Speaker
So we said that we want to be able to own best-in-class agencies or build best-in-class agencies. So we finally walked away from WPT, decided to chase this network blueprint that we have written.
Agency Network Model and Specialization
00:30:52
Speaker
And I think this is about now, about almost four years ago.
00:30:55
Speaker
And four years since we've been building our own network, we now have 11-12 agencies as a part of this network. A lot of them have become best in class in what they do. A lot of them are acquisitions, which are now coming into the market. And these are proper, you know, like majority acquisitions. These are like so proper M&A, and we have joint ventures and partnerships with other areas of expertise. So we've built this network that we think is the future of digital networks. And it's working. We're now
00:31:24
Speaker
Internationally present, we're making acquisitions and deals in the US. We're making them in the Middle East because this network model works. And just like we set a trend for a lot of these other things, now every agency wants to become a network who's independent. So I want to understand first traditional ad business stakeholders. So I, for example, my understanding of
00:31:49
Speaker
marketing is based on what I see digital startups doing where creative and media is the same thing. I mean, you can't, you need to see how your creative is doing to make it better. So both these things are done by the same team only. So I'm not
00:32:04
Speaker
able to really imagine that world which must have existed previously. Can you paint a picture to me on how the traditional agency was set up? Like you said, some agencies are more on creative, some are more on media. So what are those different verticals in which agencies specialized? What was that traditional ad business? What did that look like?
00:32:22
Speaker
So I think in the 1970s, you know, like Ogilvie would do creative and media buying and everything that comes from there. But as agencies started to consolidate with networks, what networks start to realize is that they have a better buying power if they're able to buy as a cellular entity, right? So if Ogilvie is buying 50 crores of holdings and JWT is buying 50 crores of holdings and
00:32:44
Speaker
five other agencies and WPP are all buying 50 crore of these authorities. Now, they have individual contracts with all of these people. Bosses, they go and say that, hey, I'm going to be one person who's guaranteeing 500 crore of these two. Buying power increases up until the negotiate better rates increases. Also, the mindset is steady, right-brained or left-brained. Creative is completely on one side and media buying is all on one side. We used to keep joking that creative is a PowerPoint business and media planning is an Excel sheet business.
00:33:11
Speaker
And bridging both of these things together becomes a very difficult culture to actually sustain. So in the 1980s, WFP split media and created into two different cohorts internally. And then all the other networks followed. So GroupM today will do all the media planning in mind. So in India, they control 65% of all media inventory. So the reason that it becomes difficult
00:33:35
Speaker
with them is because they will go and do like thousands of crores worth of deals with traditional advertising, right? And then how do you compete with those rates? How do you compete with that? But obviously in digital, because it's readable buying because the role of creative on the cost of click can be improved or can be worsened based on how your creative functions.
00:33:52
Speaker
It's a lot more homogeneous for us to actually compete. Otherwise, competing with the big four in terms of pure pay, reserve buys, as we call it, run based off a newspaper, hoardings, theater advertising, TV spots, et cetera, becomes very difficult because they'll go and say, tell star yellow, you know, I'm doing a 2000 crore deal with you versus.
00:34:11
Speaker
I can't commit 20 crore rupees also to star. So in that, I'm not even on the pecking order, right? So how do I go to a bigger client and win that business? Versus in digital, the role of creative on the cost of media versus the cost of media and the different kinds of creatives you create for different audiences also affect the want of coming of these agencies together. So that's where this conversation is.
00:34:34
Speaker
Isn't a digital marketing agency inherently 360 degree? Like you said, you want it to be 360 degree. What were the pieces that you wanted to plug in? No. So again, they wanted to either call us a creative digital shop or they wanted to call us a media digital shop.
00:34:51
Speaker
We could not say that I want creative and media to come together because they didn't know how to structure you. You need to have both these field sets at equal proportions to actually succeed in the digital ecosystem. And it is very difficult because the mindset is different. The creative person is looking at spending a little bit more money to get a little bit more production value.
00:35:09
Speaker
versus the media person is doing everything to optimize the click by two more paisa. So the mindsets are very different and to get these people on the same page is damn hard. So that's the narrative that we were chasing. And today, for example, we have the rabbit hole, which does all of Netflix's work in India, right? Now they're a production studio or a video studio as they like to call themselves.
00:35:29
Speaker
We built that agency from ground up internally. Now it's become the largest and the best video solutions agency in the digital realm that exists. So again, we've done that. We started this agency called Olin, which was completely focused on influencers. Again, the top agency for influencer business in this country today. Again, homegrown after 2018, we made an acquisition offer of an agency called the starter lab.
00:35:52
Speaker
which is working with only D2C agencies and e-commerce and e-commerce, you know, focused businesses. We made an acquisition of a technology company called Noesis. We started a consulting company called Doinoic. Tell me about each of the, if you could just spend a minute on each of these.
00:36:07
Speaker
This is an acquisition in the technology space. They do websites, they do technology, they build products, they build solutions that integrate the technology as the backbone for all media and creative that we actually do. Again, neither Sivir or me are technology founders, as you can essentially see them. We understand technology, but we cannot do anything with technology. So we require technology leadership in the system. So Siddharth became that pillar that we went out and made this acquisition of.
00:36:33
Speaker
built Siddharth, then we started this agency called Farsi with just as creative technology. So face filters, chatbots, to use machine learning algorithms and build solutions for clients which are a lot more front-facing. We've done that. We have a joint venture in the sporting ecosystem called TCM, a platform. So with them, we did the closing ceremony of the IPL now. We did the auction. We did the chess Olympiad with the event where our Prime Minister was a part of it. We handled
00:37:03
Speaker
No supergiants, Gujarat titans. So it's a sports focused agency that works there. We have a joint venture with an events agency called Xstan. Now what we're doing over there also is that we're building the offline to online to offline sort of narrative for brands. So now there are about 10 or 11 of these agencies that have become a part of the network.
00:37:23
Speaker
Both Surya and I believe that India's strike has come. We were setting up in the Middle East, the sentiment was very different versus now when we go into the Middle East, the sentiment is very different. If you're an Indian, you're given more than an equal seat on the table. So I want to understand, you said that you built Rabbit Hole in-house as a video agency. Why not just have it as a division? Why have it as an agency? What is the value of doing it? And how did you do it? Does it mean that you had a co-founder for that?
00:37:50
Speaker
You needed an entrepreneurial mindset, an entrepreneurial bandwidth, which the two of you did not have. Therefore, you wet that root or help yourself. No, no, no. So, Rishabh Khattar is the one who leads this agency. He was a part of Foxy moron. He was this talent is inbuilt. It's not like we went outside and found ourselves a co-founder. This was more of an entrepreneurial venture between him and us and all of that. I tried to explain the success. So what happens is that in Foxy, for example, we're generating a certain amount of cash for this business.
00:38:20
Speaker
And while we're generating a certain amount of cash for this business, we're using that cash as a benchmark to make investments. Versus if we start a business from scratch, you really have to be best in class. So suddenly for me, the rabbit hole had to go out into the market and build its own credibility, build its own business, have the right type of people to be able to do that. That mindset shift of being a division
00:38:44
Speaker
in an agency versus being an agency who is an expert in doing something is very different. It makes you take the kind of risks you need to take. It makes you hire people that you can't afford. It makes you go out in the market and be hungry.
00:39:03
Speaker
So what do they have to do to really go to the next level? And that's a mindset shift and also very different kind of talent and very different kind of culture. You start to unify a lot of these things. Like I will hire agency folk in Foxymoron like I've always hired people. Versus Rabbitwood requires a completely different mindset.
00:39:23
Speaker
So, it also makes us see the same problem very differently. Because I am not resting on my laurels or the business I've already built. I have to go out there and do it. Even Sothi Moran was one of the biggest contributors to the rabbit hole initially.
00:39:38
Speaker
And today they handle Netflix, today they handle Swiggy, they handle some of the biggest brands in the country from a content and editorial point of view. They would have never been able to achieve this if they were a division in Foxy. And the nuances seem so small, but they make the biggest impact. And we've seen it happen.
00:39:56
Speaker
One time you do it, Foxy moron could have been a slooke. The second time you do it with a rabbit hole, it could have been lucky. But now that we've done it with seven or eight agencies, there's obviously a lot more method to this madness than we make it see. And the network structure works because now a rabbit hole is also a contributor to Foxy moron's business or polling is also a contributor to Foxy moron business.
00:40:17
Speaker
Each of these agencies, on their own, also become seeders into my funnel for business development. So it says, I'm making this video, but it's created by execution social media with KonKarega. Yeah, so media planning KonKarega. Then proxy moron gets involved. So the vision of our network at Zoom is to become the pre-solved network of choice for leading brands globally.
00:40:39
Speaker
So we're saying that it's all about a brand coming here and saying, I will work for Foxy. They must work with at least four agencies in our ecosystem. And even brands for that matter, they're seeking expertise in different agencies. Everybody is saying, I have video capabilities. Everyone is saying I have influencer capabilities. But do you have the influencer capabilities and the video capabilities that we can stand on their own to speak?
00:41:02
Speaker
And in our case, the answer to the question is yes. Where will you go? You will eventually come into our zoo at some point and then we will tell you where to go. And Rishabh has a stake in the rabbit hole, like who's heading it. We're just about doing an ESOP policy for the first time. So there will be ESOPs that will be rolled out.
00:41:20
Speaker
So when you acquire, in that case, do you give them cash and buy out a majority stake or do they get shares in Foxyboro? How do you do the acquisitions? It's a cash plus business acquisition. So it's about us giving them a little bit of cash and also growing their business so that the value of their 100% shares is equal to the 49 cent or whatever it is that they want inside the organization. So it's a cash plus business deal in most cases. And
00:41:47
Speaker
If you've only loaned M&A correctly, it pays for itself over a period of time, if the deals make sense. Tell me about your first acquisition. Why are you nervous? You would have to take out money from the business and give it to a group of unknown people. It was a big bet today. Tell me about how you thought through that process and what you learned in that process.
00:42:09
Speaker
We learned a lot, to be very honest. I mean, for the first time, we were on the buy side and not on the sell side. So the mindset completely changes. And I think we've been all fortunate to have both sides of the conversation. So you understand what an entrepreneur is looking on the other side. What are the software aspects he or she is looking for? What is the value that he or she wants to derive? What is the importance of the vision? What is the importance of how your systems and processes
00:42:33
Speaker
So, because we were on the sell side for 4 years and still continue to protect the relationship for as long as we protected the relationship, I think we started off as an advantage. Also, Saweer and me are built in a way that if we are taking risks, we feel in control. The day we stopped taking risks, we really feel nervous. So, because we were committing to do this,
00:42:52
Speaker
I felt like we were a lot better in control of our emotions and what we were doing. I think Novus Energy is also great, right? Because it makes you a lot more aware. It makes you take the right kind of decisions more than anything. So, for me, that Novus Energy was always translating into doing more, understanding the emotional equation, what would it take to make the deal happen, what kind of integrations need to happen. So, we were not scared to give away cash.
00:43:20
Speaker
or control or now work with newer partners because we had two exiting partners and that created a ruckus in our lives.
Maintaining Vision and Strategic Growth
00:43:27
Speaker
We were actually more welcoming to us now. We had another layer of leadership inside of our network that was also self-motivated. So for us, we kept looking at the fact that I don't need to do the basics with these people. I don't need to continuously motivate them. The harder conversations that you have with an employee become a lot easier with a person.
00:43:50
Speaker
who is an entrepreneur, who has equity over there. Amazing. I guess the WPP experience, that's the silver lining in that cloud, that it gave you that biggest game changer. I think those five years were the biggest game changer in both Sivir and my life. So who are your competitors? Are there other like digital first agencies? I believe Miram would be one of them, like in terms of competition for you. Lots of them, there are.
00:44:15
Speaker
There is the glitch, there is red chutney, there is like a social connect. Then lots of these people in the ecosystem will keep coming. And some of them have been very consistent in what they do. Great people, great founders. I think at once in time, knowingly and unknowingly, they keep pushing each other because somebody is doing something really well. And then we're like, okay, this makes sense. Do it. Pick up the phone, check the person. And there's enough business for all of us to hire. What is the scale that they are at? Like you told me you're at about 250 connoisseurs.
00:44:45
Speaker
Are there other agencies bigger than you, smaller than you? As an independent network, we're currently the largest in the country as an independent network. So there are other agencies who belong to networks who will be of a similar size, similar structure, etc. But none independently are non-funded and existing who are our size for sure. But at some point in time, this consolidation will happen because the stock market doesn't like service businesses because they're very asset-like.
00:45:14
Speaker
we don't own buildings and we don't own machinery and we don't own raw material. So it becomes very difficult for them to quantify that. And because a lot of these service businesses are very, very founder-led and very, very team-led, they think of them as fairly risky propositions. So listing is an option, acquisition is an option. But again, right now we're focused on just doing right by our vision. I don't think that we've unlocked our vision close to what we think the potential is.
00:45:42
Speaker
And wherever it takes us, we're open now. I think we just want to work with the right-minded people. We're very conscious of really, like, flying our dry color very high across the world wherever we go. And for both Sui and I, I think we think that there are lots of people who have selflessly participated in this journey with us.
00:46:01
Speaker
And if marks are ourselves, but for those people who believed in us, and for those people who gave it their heart and soul, a pricing event, as we call it, like I don't know if it would be like equity sale, or it could be acquisition or whatever the hell it will be.
00:46:16
Speaker
The uprising event will really be a very small humble thank you from us to them and also will make us sleep well at night because really they are as much our responsibility as we are and they have done this healthlessly with us. So we carry that weight and responsibility very seamlessly because I think it's important to
00:46:38
Speaker
to make all of us cross the finish line together. It's something that sport always teaches you. You can never win alone and you can definitely never lose alone. So for me, that's a big one. And Zoo Media is your umbrella brand under which each of these agencies are housed. It's our network, yes. The vision is to make Zoo Media the WPP of India in a way. Like you want to continue to acquire more agencies and become a stronger, bigger network.
00:47:03
Speaker
Yes, it is to become a network, not in the way that those agencies are constructed. And there's a lot of merit in doing what they are doing and lots of respect to them. It's just not our vision. What is your role today as a founder? Is it largely about setting goals, goal setting, resource allocation for the various businesses? What do you spend your time?
00:47:25
Speaker
So, we didn't have a very clear way of doing this, which we set up is that I look at top line, he looks at bottom line. That's the primary. So I'm the BD guy. I go outside. I've built the top line. I'm so his job is to look at profitability as you look at those, those kinds of metrics.
00:47:41
Speaker
Apart from that, since the network has grown, what we believe is one of our largest roles is stakeholder management. There are multiple stakeholders inside of the system to create systems and processes through which we can do effective stakeholder management. I often wonder how these industrialists and large conglomerates or the singular CEOs running 10 or 12 businesses
00:48:01
Speaker
always look at multiple businesses and are still able to grow and scale them. When we were scaling Foxy, we were struggling with that. And then I wondered what it is to run five businesses. But the answer is discipline and process. So for us, we're setting up those processes and we're working on a daily basis with the stakeholders who are leading these businesses and ensuring that those businesses are scaling. I mean, growth is a problem. Not growing is a problem. Profitability is a problem. Top line is a problem.
00:48:27
Speaker
Each of the agencies have a different problem that we're dealing with every day. For example, global expansion, Surya is completely looking at. So if he's gone there, then I'm looking at the India operations and then saying, just go out there, do whatever the hell you need to do. I got your back covered. You don't have to look at what's happening in India at the moment.
00:48:45
Speaker
I want to understand why you would say no to clients. You said that you are now at a stage where 50% of the leads which come in, you have to say no to them, which I mean, somebody who, for example, runs a product business would find that univisible. Why would you say no? Can you help me understand that?
00:49:00
Speaker
The scale of the business needs to associate the people that are in our organization. Today, we have the kind of leadership who's paid a certain amount of money for starters. So there's a certain budget threshold below which we don't work. Also, we're in a creative space. We really want to be working with clients and brands that really excite us. And if we find ourselves in a space where we can be a little picky and choosy with
00:49:25
Speaker
the kind of people we were, because then it attracts the talent that comes and works with us because the talent now looks at the kind of clients you have, the kind of people that you have. This high pressure, always requiring to be creative, sort of an environment, really rubs off on everybody. And we also don't want to be a 1000, 2000, 5000 person agency. How we struggle to grow from 70 to 300 and then have to restructure, once you cross
00:49:53
Speaker
4, 500, you need to restructure again. You need to add any layers, you need to refill. So that's why we're a little bit more picky and choosing and sometimes you cannot always be in a growth and a consolidation stage at the same time. So rabbit hole for the last year was completely booked out. Everything that rabbit hole said, like we would bring to the rabbit hole and rabbit hole was one of the most talked about agencies in the last two years, because again, we've been handling Netflix for three and a half years now. And you've seen what a kind of trajectory on the content side Netflix has taken.
00:50:23
Speaker
on its digital assets. So everyone wants to work with Abbot Hall. But boss, where do I get this talent? This talent has to come in and learn its ways. So we said more to a lot of, it hurts, but sustainable businesses are fairly more, more important than just like businesses that, that shoot up very fast and they go down very fast. And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to
00:50:52
Speaker
hear them. Do you have questions for any of the guests that you heard about in this show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.