InMobi to be more prudent amid current slowdown: Naveen Tewari

InMobi, a mobile advertising technology firm, plans to be more prudent with its costs in the face of the ongoing advertising slowdown caused by a global economic downturn, co-founder Naveen Tewari told Moneycontrol on the sidelines of the Bengaluru Tech Summit.

Rising inflation, uncertainty about a looming recession, and other macroenvironmental challenges have resulted in advertisers cutting back on ad spends, affecting the revenue growth of several firms reliant on digital advertising, including Google, Meta, Snap, and Twitter.

As a result, these companies have had to cut costs and even resort to layoffs or hiring freezes.

Tewari said that they have also witnessed a business slowdown due to the overall advertising market slowing down, but they don't intend to make any drastic changes in their strategy as yet.

"We are a large player globally, hence we are also seeing an impact. The growth rates are down from whatever we had projected at the beginning of the year. But we have been a profitable company for a very long period of time, hence it's fine and we are pretty sure it will come back," Tewari said.

"We will tighten the screws a little bit here and there. Everybody's gonna do something (to rein in costs). You must react to the market sentiment and cannot be devoid of it," he said.

Tewari said that they will probably change 5 percent to 10 percent of what they did overall and make more mid-term bets rather than long-term bets.

"When you are in the bull market, you can go fund some of the very long-term bets, which you don't in a bear market. You will not maybe service unprofitable customers that you were hoping to convert into profitable customers in a two years timeline. Those are the things that we will do" he said.

SoftBank-backed InMobi will also more carefully evaluate new market rollouts for its mobile lock screen content platform Glance, Tewari said. He does not expect this move to have an impact on their goal of reaching a billion users in the next two to three years, up from 200 million this year.

Tewari said that Glance continues to witness "strong growth" in India and Southeast Asia, but provided no further details.

In February 2022, Glance raised $200 million from Jio Platforms to accelerate its global expansion. It also counts technology giant Google and Silicon Valley venture capital fund Mithril Capital among its investors and joined the unicorn club (companies with a valuation of more than $1 billion) in December 2020.

Building consumer businesses like Glance is critical for InMobi's goal of becoming one of the largest independent advertising platforms.

"Our broader strategy is to have very formidable owned and operated global consumer platforms, combine that with a very large advertising platform, and both support each other," Tewari told Moneycontrol in June 2022.

Not in "hiring mode"

While the Bengaluru-based firm has no plans for layoffs or a hiring freeze at this time, Tewari said that they are not necessarily in "hiring mode."

"We were never a big hirer since we are a technology company but that does not mean we are not going to be opportunistic about it," he said.

According to Tewari, there are currently two types of companies: those that are reacting to the market and just becoming cost-conscious, and those that are struggling due to a lack of a proper business model and free capital no longer being available in the market.

Tewari believes that the current tough economy will force everyone to build a great, sustainable business model or perish. "I think what we've had is great consumer services, not combined with a great business model, therefore those businesses are under turmoil. The (funding) craziness going away is a great sign for solid entrepreneurs to build solid products," he said.

Tewari's remarks come on the heels of a wave of startup layoffs, restructuring, and shutdowns as the ecosystem braces for a funding winter and founders try to reduce cash burn this year. This follows a blockbuster2021 in which as many as 44 unicorns were minted, with investors pouring billions of dollars.

The funding coming into Indian companies through the private equity, venture capital (PE, VC) route has slowed a little over 20 percent by value in the first nine months of 2022, Moneycontrol reported last month.

Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.