Rewind a bit to Kaun Banega Crorepati’s second season, aired from mid-2005 to early-2006. It was Comviva’s (formerly Bharti Telesoft) tele-voting app for Airtel subscribers that had millions of viewers flooding the show with SMSes for a chance to win a place on it. Airtel’s peak load capacity was utilised only for 15 minutes after each episode but costly resources got blocked over the rest of the day when only 4-5% of the network was put to use. Not only that, critical user profile data was generated but not used. Brij Mohan Mahendru, 37 years old at the time, was watching the show keenly for reasons entirely other than the Big B’s charms.
KBC2’s primitive data handling confirmed to Mahendru, then a VP at Bharti Telesoft, that a single platform was needed that would roll out multiple services (call manager, call/SMS filter) and cross-link user profiles for marketers. “I began discussing it with friends,” recalls Mahendru, co-founder and director, mCarbon, who also sounded his bosses at Comviva out on the idea. They loved it but it wasn’t Telesoft’s thing so Mahendru set out with Rajesh Razdan, a friend and erstwhile colleague heading Telesoft’s biz development in the Saarc to start mCarbon. The mobile value-added service (VAS) company with a difference was born in March 2008, after some serious preparatory legwork.
“He was a techie and I was into sales,” says Razdan, founder-director, mCarbon. Their idea was persuasive. Other erstwhile colleagues joined them. Funding was more finicky — VCs were too busy drooling over low hanging fruit like simple VAS such as hello tunes and wallpapers. But a friend pitched in with seed money and Mahendru and Razdan pooled in their savings. Then, “We presented our plan to Canaan Partners in early 2008 and they confirmed their funding by July of that year,” remembers Mahendru. Two things about mCarbon stood out for Alok Mittal, managing director of Canaan Partners’ India operations, “One was the team: both Rajesh and Brij have been in the [telecom] sector for a long time. Two, their products were solving real problems for operators.” Canaan, which was also convinced of the model’s scalability, pitched in with $5 million. Four years later, mCarbon has also deployed call-me-backs, DNDs (do-not-disturb) and missed call alerts for a client list that includes Vodafone, Idea, MTNL, MTS, Uninor and Tata DoCoMo.
mCarbon operates on an almost too-simple idea. Generally, VAS providers offer a point solutions approach, installing independent hardware and software systems for each service like caller ring back tone (CRBT) or voice messenger, and then integrating them with an operator’s network via dedicated links. “More resources are used so this increases the load on networks, consuming more space and power, and running up higher maintenance costs,” Mahendru explains. Instead, mCarbon’s Greenroom, its flagship product, sits on the operators’ networks (independent hosting is possible, if that’s what you want), delivering multiple services (call manager, SMS analyser and Channel 99, a WAP magazine) for a fraction of the resources, interpreting client profiles along the way. Mahendru is convincing: “The cost reduces to one-fourth when we do this. We have provided seven critical services to Airtel on this single platform, including Airtel’s gifting services.”
Greenroom’s other attraction is its strong analytics base: telecom operators can know not only the location and demographics of their customers but also their usage patterns, most-dialled numbers, recharge duration and bill payment cycles. Operators can offer discounts, incentives and customised plans based on this data, improving retention of their subscriber base. “We started with the call manager service for Airtel in July 2008 and by October, Idea had also become our client,” says Razdan. mCarbon closed the first fiscal of its operations, FY09, with a revenue of ₹4.5 crore. “We had revenues of ₹20 crore in FY12 and the target is to scale up to ₹60 crore by FY14. We will be making profits this fiscal.” Mahendru hopes mCarbon’s phase 2 will make it a ₹100-crore company by 2017.
Good going, slow revenues
“Their model is scalable,” Canaan’s Mittal observes. “The first step in the business was to get access to operators, which they have done well.” But it wasn’t easy. By 2007-08, the networks of some operators had grown to over 100 million subscribers and the behemoths weren’t interested in talking to a start-up that would ‘sit on’ them. “Convincing Airtel about Call Manager was the biggest challenge,” recalls Mahendru. Now, operators outside India are also signing up. Sri Lanka’s Dialog, part of Malaysia’s Axiata Group, is already a client; mCarbon’s 120-member team is serving Airtel in Sri Lanka, Bangladesh and Kenya; and Razdan adds that the company is in discussion with some operators in West Asia.
The greenroom advantage
Caution appears to drive mCarbon. “We could have expanded much faster,” Razdan admits. “We didn’t expose ourselves to mobile marketing services, which could bring quick money but could also be commoditised. Ours is a is long-term and networks driven model.” Competitors are equally chary, but for different reasons. The only way a network can do away with mCarbon is to replace Greenroom and the services offered through it, which won’t be easy. Mahendru explains, “It’s like a room with only one chair. Greenroom sits in the critical path of call and data and there is no scope for anyone else.”
It was Trai’s DND registry, launched in September 2011 to save telecom subscribers from pesky calls and SMS adverts, which came as a shot in the arm for mCarbon. “Suddenly, all the calls and SMSes had to be filtered,” says a smiling Mahendru. “We got significant orders from telcos like Uninor and Airtel and we leapfrogged into the deployment of large systems in just six to seven weeks.” In fact, mCarbon’s Call Manager had been designed and adopted by Airtel and Idea almost two years before DND was announced. “We were ready with it and so we got 60-70% of the market,” notes Mahendru. Since DND was mandated, it was a network load operators had to bear, which they did by buying a licence and paying mCarbon a lump sum with a capacity cap. As the number of subscribers and the telemarketing efforts increase, the peak load will go up. The company also rolled out gifting services for Airtel in March 2012, so users could gift talk time or SMS packs.
mCarbon’s revenue, like that of other VAS players, looks less laudable. Currently, telcos share upto only 20% of the monthly or per transaction subscription revenues with VAS firms. “Operators need to understand that VAS players are partners and vendors providing innovation,” wishes Mahendru, without going into the exact percentage mCarbon gets to keep. “The industry needs to re-look the revenue share model as it stands today,” he says.
The founders believe there’s no end to the services that can be offered on Greenroom; they are currently working on adding personalised messages to the call manager. Mittal agrees: “Now, they have to drive revenues.” His optimism should make the next round of funding easier for mCarbon.