How Robosoft's Rohith Bhat built a global company from a temple town in India

In this interaction with Moneycontrol, Bhat spoke about why he decided to sell, building a global venture from Udupi, and his plans for 99Games.

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Q: Robosoft, the company you founded in 1996 is now owned by Japan’s Technopro Holdings. What kind of emotions are you going through, right now?

A: It's bittersweet. There is a little small story behind this. I finished my graduation in 1992 and my first job out of college was in Japan, where I worked for a few years. So before I started Robosoft, for me, the inspiration was my trip and stay in Japan. Because until then we were always exposed to the US culture and you always aspired to go to the US. But when I went to Japan, it changed me completely. The only thing I thought back then was ‘I'm going to go back to India someday, and start a company that is world class. That is what started the journey of Robosoft in 1996.

Q: Could you share with us the story of how the whole transaction transpired? You are a profitable company, revenues are growing. What prompted this and how did you choose TechnoPro?

A: It has got more to do with our whole initiative of giving an exit to our existing investors, which are Ascent Capital and Kalaari. Last year, we had this discussion of giving them an exit, so we hired an investment banker to start that process. There were multiple companies in the fray, who sent their proposals for investments/acquisitions and exit. Finally there were three companies, all strongly interested. But we ultimately went with TechnoPro, because we felt there was the greatest strategic and cultural fit. There was a combination of both that strategic intent as well as a commercial intent that let us choose them as a rightful partner for doing this.

Q: How did your time in Japan influence you to start your own company in Udupi, a small town in Karnataka? Because you had mentioned in a previous interview that even Sony started from a small village in Japan.

A: I started working in a company called Recosoft, in Osaka, Japan. Back then, it was 1993, and Japan was at the peak of its economic power. Their car companies were beating the Detroit car companies, and Japanese firms like Sony were buying all the Hollywood Studios. Japanese yen was at its strongest, at 87 yen to $1.

That was a time period when Japan could not do anything wrong. We always grew up thinking that everything is great in the US. So you go there and build your career. I had this notion watching a lot of war movies, where you always get to hear from the side of the winners. So when I went there, I saw that they were the most hardworking and dedicated people. More than everything, I saw that here was a company (Sony) that was started in the wake of World War II and within 40-50 years they were already challenging the number one country in the world.

It was then I decided that I'm going to go back and build a world-class company. It all started with one small dream. And all these things about Sony and Samsung starting in a small village, reinforced in me that geographies are really irrelevant. You can be anywhere in the world.

Q: Based in Udupi, in a way, you pioneered this work from anywhere or remote way back, even before we are talking about it now in 2021. This would have actually been an opportunity for you to grow Robosoft in a way that you couldn't have possibly grown before. Earlier, it would have been hard for you to attract talent, and this could have actually been an opportunity for you to kind of blitzscale. Why did you decide to exit now?

A: It is more of an evolution of Robosoft as a company. I started another company called 99Games, which is our own white label gaming company, and we sell it to the consumers directly all over the world. On the other hand Robosoft is more like a B2B kind of a business. At some stage in my life, I thought that we are building all these great products, and we are building it for other customers.

We should build our products, and market it to any country in the world and probably grow 10x bigger than what would have been possible in the same timeframe. I realised that B2C is where my real passion was. So about three years ago, we had a conversation internally and hired Ravi Teja Bommireddipalli as a CEO. This is so that he can start running the company independently. He has been with us for the last almost four years now and helping us grow the business. That leaves me free to focus my attention on 99Games.

Q: Given that you are profitable, at Rs 49.4 crore, up 170 percent year-on-year in FY21, did listing Robosoft in Indian stock exchanges cross your mind?

A: Yes, that definitely did cross our mind. We were contemplating it seriously at one point in time. We were always thinking that if we are not able to get our investors exit through this route, we will consider an IPO. So that was definitely playing on our mind. But at the end of it, we got this particular exit, and it kind of freed up my mind to focus on gaming full time. So with an IPO, I would still focus on the business with Robosoft.

Q: Will your approach with 99Games be different compared to Robosoft? While the latter was growing and profitable, it didn't really scale up in a big way. For a B2C business, which are usually heavily funded and discount heavy to keep growing your user base, how would it be different for you as an entrepreneur?

A: There is always a notion that you need to take heavy funding and build companies with a lot of investment. That is one way of doing it. But you can also build a gaming company while you stay profitable. My vision is to build 99Games profitably and not spend a lot of money chasing users, and be unprofitable. Unprofitable growth is not high on my priority list with 99Games. But the idea is to grow faster than we were able to grow Robosoft, because now we have a lot of lessons that we learnt and it is possible to do that.

Q: With 99Games, are you looking at a model similar to Nazara?

A: Nazara has different parts to their business, like e-sports and also the kids’ space. We are into casual gaming. We have a game called Star chef, which we built four years ago, and that one game has generated more than $30 million in revenues over the last five years. Last year, we launched the second iteration of that product, and we think that we can take that from $30 million to $300 million. So, there is an opportunity to do that by sitting in India, and making a game for the entire world.

Q: What is the market you are focusing on for 99Games?

A: We are not targeting the Indian market and at the moment we are focused more on global. For Star chef, 99 percent of the monetization happens with consumers around the world and is primarily through in-app purchases, and not through advertisement. In gaming we want to focus on just one or two genres and do really well in these. Our focus is simulation games in the cooking space, which is targeted towards women in the 35-55 age group. The most important thing is focus. We have tried to do many things in the past and failed. So, we intend to focus very deeply and scale each of these games.

Q: How big is 99Games and what is the roadmap going to be?

A: 99Games is a much smaller company, 55-60 people. And the idea is to focus on one or two genres. Ours is simulation games, which itself is a $1.5 billion. Because gaming as a whole is a $200 billion industry. And we want to just focus on this particular genre, and try to see if you can take the game from where we are to probably say $50 million and once we reach there to 100 million.

A: So, when Robosoft was started in 1996, our first customer was Apple. They started putting us on their website. Then we started getting partners like Epson, Hewlett Packard, and other companies from around the world based on Apple's recommendation. In 2005, Apple recommended us to a lot of gaming companies, as well as the whole publishers like Ubisoft, and Electronic Arts.

But, everything changed for us with the iPhone. Because we were such close partners of Apple, they gave us access to their software development kit and the freedom of building app for Apple. When Steve Jobs announced the launch of the iPhone, of the 200 apps that were live on day one, five of them were built by Robosoft. That was our introduction to the mobile ecosystem. We went into mobile just because Apple told us and when we saw the initial traction that these companies were getting on mobile, we knew something was different.

And, we kind of positioned our entire company to focus on mobile, initially on iOS, then on Android. We even became a product specialist, opening our own design studio. That was around the same time in 2010, when Vijay Shekhar Sharma reached out to us. We have worked with them ever since that time. So far we have built more than 2000 apps with close to a billion downloads.

Q: Based in Udupi, how difficult was it to retain talent, when people want to move to cities?

A: Back in 2004-05, when we were growing and around 150 employees, people were leaving and joining companies in Bengaluru. I started asking people, why do they want to leave? Then, one person came and told us, they are leaving because their parents want them to work in a big, shiny glass building. They don't want us to work in Udupi.

And, then, I said, "Okay, now we know we need to do something because it is becoming a HR problem." So we started looking for a space and we wanted our building to be on the National Highway because I was so tired of hearing that excuse. By that point in time, we found the land right on NH 66 and decided to build a round glass building.

This is a highway that connects us to Bombay and Goa and all these places. So whenever people come back to their hometown, they always have to pass our building. And everyone, including the parents would see our building here because it is such a huge building in the middle of nowhere. After that we never had that as an excuse from anyone.

Q: You think it'll be easier to attract talent for 99 games now that everybody's talking about remote working and working from anywhere?

A: In six months, I will tell you how everything is going.

Robosoft's round glass building campus in Udupi.