Nitish Mittersain on entering an industry that didn’t exist, aiming for the stars and landing on the moon, and success being an outcome of EQ
- Episode 5
- Reading Time
- 40 minutes
In this episode, Arpit Agarwal, Director at Blume Ventures, sat down with Nitish Mittersain of Nazara Technologies on running a listed gaming company. From coding at the age of seven to bouncing back from an incorrectly timed IPO listing decades later, Nitish’s unconventional path to success makes him a true X‑Unicorn founder.
This transcript was AI-generated and went through multiple rounds of proofreading. However, there might be a few errors that may have slipped through the cracks.
Arpit: Hello everyone. Today I have a very special guest with me. This person is Nitish Mittersain. He has a unique example of taking a gaming company to IPO. Gaming in India is still quite nascent. A lot of people love it, and increasingly more people are getting onto it, and a lot of startups do figure in this area. However, Nazara has built a very successful, sustainable, and fast scaling business. So, this is a very unique example. Thank you Nitish for joining us on this X-Unicorn podcast.
For those of you who are joining for the first time, X-Unicorn is a podcast series that we have started at Blume Ventures to bring out unique journeys of startups which have taken varied paths into success. The success could be a unicorn or multi-unicorn, could also be an IPO, or maybe not a unicorn, but the idea is to make sure that people have understood that there are a hundred thousand different paths to get to startup success with this. Welcome Nitish to this podcast and thank you for spending your time with us.
Nitish: Thank you. Happy to be here.
Arpit: I know Nitish that you were born and raised in Mumbai, and I know that you come from a Marwari family who otherwise did not have much to do with digital and technical background. Is there something that you want to talk about your very early days that made you very interested in gaming?
Nitish: Yeah, I came from a textile business family. My dad bought me ZX Spectrum when I was just six years old. Once I got that device, I was completely enamoured with it, and that became my life. So I started playing around with games. Then I started experimenting with BASIC (programming) language. I started coding games at seven, and that became my life, and one thing led to the other. I really never went down the path of traditional business and textiles.
As I was growing up, I was more and more into the internet, which was then coming into India. I was spending a lot of time with my mentor Shammi Kapoor, the legendary actor, and we used to talk a lot about how the internet is going to change the entertainment industry. The dotcom boom was happening and all of that plus my passion in gaming made me think that gaming could become a large industry in India. It didn't exist at that point of time. I'm talking of ‘97, ‘98, but I just jumped into it.
Arpit: You were 22 when you started?
Nitish: I was younger actually. I think 18-19.
Arpit: Did you know what it means to run a business and what it would take to run a business?
Nitish: No, I didn't. Honestly, the early years were tough for me. But I learned my lessons well, hopefully well at that point of time.
Arpit: Okay, so because gaming was not a business per se, and people were still figuring what even the internet was, and I know that you have gone through a dotcom crash, we'll talk about this in a bit. How did you figure out the basics and who were the early mentors that were very useful at that point of time?
Nitish: I think for me it was this dream that gaming will become very large in India. I didn't realise when I was starting off too early, more than a decade too early. Devices didn't exist. Internet bandwidth didn't exist. Monetization methods didn't exist. But I just was enamoured with that dream that I had, that sometime in the future, gaming will become big. And as a young entrepreneur, 18-19 years old, you're not realising that maybe you are too early in the market or whatever. So that's what I was pursuing and that's how I started Nazara, put together a team, got some angel investors in 2000 just before the dotcom crash, and we did some interesting stuff.
We were doing flash-based gaming, we had nazara.com where people could log in, we were monetizing through brands. We did some interesting stuff. When I look back at that time, I think we were quite ahead of the curve. In terms of mentors, like I said, I spent quite some time with Shammi Kapoor. While he obviously was not a gamer per se, he was very passionate about the online world in those days, and very passionate about what could happen with the entertainment industry and internet merging together. So I did get a lot of inspiration spending time with him and talking to him.
My parents and my dad especially were very supportive. Otherwise, you would think coming from a traditional textile business, the son going into something like gaming which didn't seem like a business, no clear-cut business model, parents would be worried. But my parents were very supportive.
Arpit: How did they discover this? Because I remember when I started up, I was doing incubator management services and it took my parents about 5-6 years to understand what business incubator means. How did your parents relate to this?
Nitish: I think they'd seen me grow up, right, and they'd seen me get into gaming and technology since the age of seven. So by the time I started up at 17-18, they had already seen the way I had evolved over a decade or so. So I think my parents really realised that this was my calling and my dad always felt that it's always good to do something new and forward-looking. So that also was a checkbox, and I think that's why it wasn't a big surprise for them for me to move into that space where they've seen me growing up as a child and being involved in that industry for quite some time.
Arpit: Do you feel lucky that you were born in a privileged background? You didn't have to worry about daily bread or a family to take care of?
Nitish: Yeah, absolutely. Although that said, during the dotcom period, I did have my own set of challenges. Our traditional textile business had also slowed down by that point of time, so it's not that it was all hunky dory, there were challenges but yeah, I think there were some benefits of my parents being able
Arpit: Very interesting, but starting with the dotcom crash and many other things that happened after that, you as an entrepreneur were getting settled into an area where not a lot was known. Everything was largely unknown, and you had to really make your road as you go along. What kept you going as an entrepreneur and what keeps you going today? See, things are very different 20 years apart. I'm sure you’ve matured a lot in this period, but what were the first few things that you think you did right? Maybe it came intuitively to you, which people can take inspiration from.
Nitish: Sure. So for me, in my 22 years of career, as an entrepreneur, I think there have been two sides. One side is always being paranoid, the other side always being optimistic, and I think it's like a yin and yang that keeps playing out inside me, and it doesn't change, honestly. It's the same as it was in 2000 or as it's today in 2022. It's really the same. You’re always paranoid, you're always optimistic as an entrepreneur.
Arpit: As a consequence, you're always maybe nervous?
Nitish: Not necessarily, I think for myself, I think I'm fairly calm. People tell that I'm fairly calm. But you do not get complacent. Today Nazara has gone public. It's a listed company. You said it was an exit for me, it was a new beginning, right, but are we complacent? Not at all. Do I still feel paranoid about my business? Yes. How do we do better? What are the risks? What are the challenges? How do we foresee and how do we pre-empt? Those are thoughts I think, which will always be in the life of an entrepreneur. It doesn't really change, correlated to the stage of your business.
Arpit: Very interesting. See, it is relatively easy, I've seen people to be starry-eyed, especially youngsters, 18 years old, 20 years old, even 25. Very easy for them to be starry-eyed and optimistic about the situation, and always overestimate your capability, and underestimate the risk. How do you keep the balance between paranoia, which is also essential, for it keeps you real and optimistic? Is there a secret sauce there?
Nitish: I think it's about being true to yourself, learning from your mistakes. For example, the dotcom crash. Early years taught me a few lessons, and I've tried to ingrain them into the DNA of the company and stay true to that. So I think as long as, you make mistakes, you will cross the line at some point of time in terms of your over optimism, like you just said, as long as you learn from your mistakes and remember them and don't keep repeating them, you will be okay.
Arpit: At times, people do become more confident. I'm sure you've seen so many people become brash about decisions that they take, especially in these years when you get a lot of funding, by stroke of luck, let's say. People do get brash, they start burning too much money. What would you have done? Suppose things are going very well. I'm sure there are good periods as well. What would you do to make sure that you are still balanced?
Nitish: I think my early experiences taught me a lot of humility and therefore I don't think brashness is something that comes easy to me. For example, the Nazara IPO happened after a lot of effort and the euphoria perhaps would've lasted for a maximum 24 hours. Then it was forgotten and back to the next thing. So I think if you've been an entrepreneur for many, many years, you've been through a lot of ups and downs, you lose that brashness. At the same time, I think it also sometimes makes you a little conservative and young entrepreneurs these days, I think they should be aggressive. They should be perhaps over-optimistic because the market allows for that. You have enough risk capital available today and they should aim for the stars and at least land on the moon, right.
Arpit: Absolutely true and very well put. Is there anything in the support system, close family, parents, friends who keep you sane, keep you focused, keep you more grounded?
Nitish: Family, of course. My parents, my wife, my kids. I'm very much a family person and I think they're kind of the rock for me. You can always go back to them when things are not doing very well.
Arpit: Talk about your hobbies. Do they also play a role? I know you are a musician, you are also learning martial arts. Is there any role they play to help you learn new skills maybe, or keep you more focused or take that downtime?
Nitish: Absolutely. So my music has played a great role I think over the years. I've been in a jazz band for 25 years. I picked up sax(ophone) when I was 17-18, just around the time I was starting my company.
Arpit: Your saxophone hobby is as old as Nazara.
Nitish: Absolutely. In fact, it was 2000 or 2001 when I also played the saxophone for the Movers and Shakers by Shekhar Suman which was a very popular show. It's been there for a long time.
Arpit: So we have a star amongst us.
Nitish: But I think how it has really helped me is to be a great de-stressor, especially at times of stress. When I pick up my sax all the stress goes away. And therefore, even today, every weekend I try and practise it. I put up my videos on Instagram or Facebook so that my friends can see it.
Arpit: I've seen those.
Nitish: So I think it's a great outlet to de-stress and I highly encourage it. The martial arts I picked up a few years back. I think I wanted to do something that was fit and something that was different. What I realised for myself is if you do new things, it keeps you young in mind, young in heart, more passionate. It always helps. I highly encourage all entrepreneurs; your business is important, your startup is important, but keep other passions alive. Prioritise your family. And I also think for startup founders especially because of the stress, prioritise your health, I think that's very important.
Arpit: That's great advice to all the listeners. I cannot agree more. There is a lot of need for people to stay focused, try to de-stress, pick up hobbies also, family time. Ultimately, we are doing a marathon, isn't it? All high performance entrepreneurship is about running a long race. If you let go of the engine, then where is the car going to race?
Nitish: Absolutely. Thank you.
Arpit: This is very interesting. I want to talk about three things which have happened in your journey. I'm sure there are more things like that. There is a Sachin Tendulkar incident. There is Shammi Kapoor and, and there's Rakesh Jhunjhunwala, all stars. And typically it wouldn't happen that you will go to them and they will agree to whatever you are asking. You seem to be a youngster to them. They have a hundred other things to do. And they wouldn't pay attention. And because three things have happened, it tells me that you have attempted impossible goals many, many more times. Tell me, what do you do when you go and attempt a goal which seems impossible to everyone else, but in your heart that you think you have a chance?
Nitish: I think you need to be as transparent as possible. A lot of these people that you mentioned, right, are very experienced and they see through you very quickly. So I think if they can see that real passion inside you, the real positive intent of wanting to achieve something, do something, they are usually very supportive. And I think being true to yourself is the most important thing there. You can't fool all these people.
Arpit: True to self, the self-humility keeps coming back into the equation. What do you do? What do you tell them? What preparation do you do? Because ultimately they're also spending their time. They must be getting something out of it.
Nitish: Sure. I think in each of the people you mentioned, it was different things. If you talk about Sachin, right, I went to him in 2004, and said this whole mobile revolution is happening and gaming will become big. I couldn't offer him much in terms of endorsement fees, etcetera, but I did my homework. I took a game which already had him as a character and showed it to him. He really loved it. I told him that this could be a great way for him to connect to his young fans, which he really liked, and that's what really worked, right.
In the case of Shammi Kapoor, actually I had just invited him to inaugurate the computer centre at Sydenham College, which I was in charge of, and we just struck a friendship. He was 60, I was 16. We had one common interest which was computers and technology and the internet. I had a vested interest because in his house at Nepean Sea Road, he had a computer den with about 6-7 state-of-the-art Macintoshes and me as a 16 year old obviously didn't have access to such devices. So I took advantage of that friendship to spend time at his house and play around with those computers. And he connected with someone who was younger but also had the same enthusiasm for what he was enthusiastic about, which was computers and internet and online. So it was a mutual friendship. There was really no give and take in that particular relationship
With Rakesh Jhunjhunwala, who I got to know about five years back, he liked what we had done. He liked the potential of the gaming industry going forward. He liked Nazara's DNA of running profitable, tangible cash flow businesses because he was a little averse to new age businesses which are burning a lot of money, whether right or wrong. But the good part is over the five years he spent a lot of time with us. His office was just across the road from our office, so I must have met him 30- 40 times in the last five years, and again, learned a lot from him. He obviously didn't know that much about gaming, but then all his experience across so many businesses helped.
Arpit: And this investment happened in one meeting?
Nitish: Yeah, he decided in one meeting to invest 200 crores in the company
Arpit: So let me give you a situation. Let us say you are an entrepreneur who is attempting, let's say one particular competition or person to say yes. What are the three things you will tell this person? I'm sure on the merit of their proposition, they're very solid. They may be very good at the product that they're building. They somehow have access to, let's say, 10 minutes with Sachin Tendulkar. With Sachin, what would you advise them to do? Three things. So that they can be better prepared and they increase their chance of success in whatever is possible from that outcome.
Nitish: I think they should keep it very straightforward. ‘Cause a lot of these people are very busy, physically and mentally, so their attention span can be quite limited. Therefore, you need to get to the point. Like in the case of Sachin, I actually embedded his character into the game, took it and just showed it to him. Had I spoken for 30 minutes he would've properly got bored and lost interest. Demonstrate what you're trying to do, put in a lot of hard work in preparing for this meeting, and then get straight to the point and be transparent, be passionate about what you really want to do, and hopefully that will convince them.
Arpit: So, be prepared. Be transparent. And be straight. That's very good advice. And things may or may not play out. I'm sure there are instances where things did not play out for you, and that is perfectly fine. Things will happen all the time. And a lot of entrepreneurs have this challenge especially in India today, venture capital has become very popular. Every entrepreneur, especially in tier two towns, think that they should get venture capital, but they don't have access to it. Largely it is a tier one phenomena, mostly Bombay Delhi Bangalore phenomena. How did you approach your first investors? What is your advice to them about approaching investors, what do you think worked in your case?
Nitish: So in my case, I got lucky. After the Sachin Tendulkar deal, the company got a bit of media publicity and I was on the CNBC interview, which Sandeep Singhal, the partner at WestBridge saw and reached out to me. So sometimes publicity also helps, PR helps, and in my case, that helped. And then of course we engaged for six, nine months before they took the decision to invest. And that was great of them because gaming back, even in 2004-2005, from an India perspective really didn't exist. They really took a leap of faith in making that investment or have that vision of making that investment at that point of time.
I would not agree with you that today funding is available only in metro cities. I think it's becoming a lot more widespread. You have a lot of angel syndicates and these angel clubs and all which are actually going to smaller towns doing road shows, doing events. So I think it's becoming a lot more accessible. You have a lot of HNIs across the country who want to write cheques into startups who've seen the potential. So I think this excuse of not having access to capital might be a bit dated. I think it's very much available to everyone and you just need to be able to, again, very clearly show what you are doing, why you are doing and what you need for it. You need to focus on real metrics instead of vanity metrics. Because investors are smart, whether they are angel investors or they are large VCs, I'm sure when they're writing a check, even it's of INR 10 lakhs or of hundred crore rupees, they will apply their mind and focus on what you are doing. So I think, again, being very straightforward, clear cut and passionate will get you there. Access is available I think, going forward, raising capital is not going to be the issue in India. I think it's about what you do with that capital that is going to be the bigger battle to win.
Arpit: Very interesting. I do want to agree, however, there are so many listeners who may not have had the same experience, but I agree that there is a lot more democratisation already happening and angel networks especially are playing a great role in making this accessible, plus angel investors definitely also bring a lot of perspective and advice, which is very useful for that business. Tell us about your experience with WestBridge Capital once they got on board, how did they support you through the journey?
Nitish: Sure. So I had a great relationship with Sandeep Singhal and WestBridge for I think 15 years till they completely exited from the company. And I can think of two, three things (of support) in the initial couple of years. I think the first thing they helped us do is set better governance, better audit process. Early on they helped us bring in E&Y as an auditor even when the company was very small and at that point of time, I wondered why the company needed a top four auditor. But over the years it really helped us think better in terms of corporate governance, in terms of having our books in shape, in terms of small things like related party transactions, et cetera. And that really helped us over the years, especially as we went public. We had been working like that for a decade and it was not a change for us. We didn't have to adapt. So I think that was one big value add that WestBridge brought to us in trying to become a better-governed company at a young age.
Arpit: I would say at a young stage, even though you may not have thought this was very important. Fair. What else?
Nitish: I think in terms of network, in terms of introductions, they always helped us where they needed to. I think quite early on they realised that our intent was positive. Our efforts were positive. Maybe the market was taking time to grow, but they didn't interfere much in our day-to-day operations, let us be on our own and did more of a support role when we needed them. So when I needed help, I would call Sandeep Singhal, he was always accessible. To an extent, they also left us on our own to grow, and I think that worked well.
Arpit: Sandeep himself is a rockstar.
Arpit: It is probably lucky of you to get him to be available for advising you.
Arpit: I do also see this thing playing out again. As investors, it is a great morale booster when you know that the entrepreneur that you're betting on is being honest and straight to you, because very often people do try to take shortcuts and eventually, because we are on the company for a long time, we will be able to figure this out and then the trust goes down as a consequence, are ability impact goes down. The company may or may not become big. That's a separate matter. But if you have been straight and honest to people, that really goes a long way. I think this is continuing to play out a big role in your entire journey, Nitish, I'm so happy to see, And you're talking about it again and again.
If there is something that you would have wanted investors to play a role in, what would you want, if suppose you want to start the journey again and you want to pick up more investors, what things that you would want them to do now that you have already had a good experience? You are mature and built a large company already, but what would you advise entrepreneurs look for in an investor?
Nitish: I think now because you have a large number of investors available, it's always helpful to get in investors who have a stronger focus in the domain they're operating because they will have stronger learnings over there, they will have stronger networks over there, and that will always be very helpful. I think if the investor can also help you build a strong board, it can be very useful because I think for young companies if they're able to also focus on building good boards, with different board members who can add value in the right manner, I think that can help a lot. And I think finally founders have to see what is the right chemistry with the right investors. I think chemistry is really important because you can sit and do business, but if the chemistry won't work, things usually go down problematically.
Arpit: So having domain expertise and having a good understanding in chemistry with the investor will go a long way, and eventually setting the board who can help and bring the right advice at the right point of time is an important ingredient into success.
Nitish: I agree. This is a very important piece.
Arpit: Tell us, how did these investors help you when things were going great, and how did they help you when things were not going great?
Nitish: Look for me for almost the entire duration of Nazara, we had WestBridge as the only investor from 2005 to 2018. Then we onboarded Rakeshji (Jhunjhunwala) and India Infoline, as investors into the company. I think for most of the growing-up years, it was really WestBridge, right? So it's for me, a very specific question to WestBridge. I think when things are going great, the best way they help us is by not interfering and letting us do what we were, right. But there was very little distraction caused by the investors.
Arpit: That's a very important tool that investors also have to play when you have to let the ship be, let the entrepreneur do.
Nitish: And I think even when things were going great many times they did come with suggestions to look at business opportunities, let us research it, and if we said we didn't want to do it, they were okay with it. So I think backing us and letting us take our own decisions despite holding a good amount of equity, I think that was very useful when things are going well. I think WestBridge came in 2005 for us. 2005, to I would say 2007 or 2008 was still a period of discovery where we were still trying to find our feet. Post that our business grew, we became profitable and we actually never raised any capital until 2018, right. So we really didn't have a challenge after that period because prior to that two, three years post-investment, when we were still trying to find our feet, I think at that point of time, Westbridge was very patient. They knew it's a new, it's an evolving industry, and they were very patient. I think that the patience also helped because if investors get very upset or very restless, it also disturbs a lot of things in the company when you're trying to figure things out in the first place.
Arpit: You are right. In my experience, especially early-stage businesses, and especially those businesses where a lot has to be figured out, if we act in haste, sometimes that leads to worse outcomes. We have to let entrepreneurs figure it out one by one. It is a process of experimentation. Sometimes it takes many years, and patience is of very high importance. I want to talk about one specific thing, which I notice has been unique to your journey. You have had a relatively strong record of inorganic growth where you have found very smart entrepreneurs, all people in various businesses and you have given them a platform to perform. I will ask a couple of questions on this piece. Please tell me why you choose to go inorganic? Because I'm sure internally you are capable of doing many such things and once you have chosen to get on board all of these entrepreneurs, how do you nurture them?
Nitish: Sure. So till 2016, Nazara grew only organically. There was no M&A that we had ever done, and we were a very profitable cash flow generating business. To give you a perspective, we raised in our entire lifetime, I think till then 3 million dollars. And in INR it was 12 crore rupees, because the dollar used to be 40 rupees per dollar. That's right. Per dollar. That, and by 2015-16, we were sitting on about 250 crores of cash.
Arpit: Wow. All accrued from profits, right? This is amazing.
Nitish: Yeah. So Nazara grew, built its reserves through its own organic business and through profitability. By 2015-’16, I really was feeling that my original dream of gaming becoming big in India and India becoming big in gaming, not only for its own market, but globally was starting to look a lot more possible.
It was a dream in ‘98 that was starting to look more tangible in 2015. So I said, we can keep doing what we are doing. This opportunity is gonna be so large that doing everything that we want to do ourselves may not be feasible. Point number one. Point number two, to achieve the dream that we want to achieve, you're really gonna need rock stars working alongside it and I think that's where this whole Friends of Nazara concept emerged from. And because we were in the industry for so long, we knew a lot of other passionate entrepreneurs in the gaming space, and the idea was, was what if we could all come together and work together, right, then we could really become one plus one equal to 11 and create a lot more value for all of us and do something that is impactful. I think from that concept, we started getting into the M&A space, really driven by the Friends of Nazara structure or the idea of friends of Nazara that we had in mind, and we were able to partner with very experienced and fantastic entrepreneurs in that space.
The structure we brought in worked well. We, ofcourse, learned and tweaked it along the last four-five years, and what that has allowed us to do is today build a platform that has 20-plus founders working alongside us, and getting that kind of a management team together professionally is almost impossible. It's also a very scalable model now, and Nazara can really, on that foundation grow much faster, much more aggressively, not only in India but globally, as you would've read, we just made our first acquisition in the US. Nazara emerging from India to be a global gaming player is what our dream is, and this structure allows for it. That's why we have been active in it.
Arpit: This is a great thing. What were your assumptions before you started this journey and what did you discover that you needed to provide to make sure that such smart and ambitious people continue to be long-term motivated?
Nitish: I think for us, one of the key points there was that even if we were to acquire majority equity in these companies, we would let those teams continue to operate as they were operating before we entered the picture. We would not do M&A in a traditional sense where we merge the teams, we optimise cost functions, et cetera. Because you would have a lot of cultural clashes. Every company's operating in its own culture.
Arpit: You let their culture be.
Nitish: We did not touch it.
Arpit: That is fabulous to hear.
Nitish: And except for getting certain aspects in place, for example, a common auditor and basic governance practices improving where it was not there, except for that, we let the companies operate as and played a support role and also gave a hundred percent operational freedom to the founders and the management teams over there. So I think similarly to how let's say WestBridge Capital left us on our own and played a support role is what we are doing with the companies we invest in. That was our assumption it'll work well, and I think it has worked very well for us. Of course, smaller tweaks, smaller learnings are always there, and when you're running a new type of model over the years, we are tweaking, improving, changing. But I think the broad path we envisioned has worked very well.
Arpit: It is outstanding to see because this also requires a lot of discipline from you and Manish's side to not meddle with the affairs, to not bring synergies, because let's say you are going to the same sponsor together, there'll be a instinct to go together, to share resources, and then both businesses don't work. It has to come organically, and they may speak to each other. The CEOs can collaborate. They can figure this out, but they don't necessarily need to do it together.
Nitish: Absolutely. I think our success has been more out of, I would say, EQ than IQ.
Arpit: Very well said. Thank you. I want to touch about also a very interesting part of your journey Nitish. At some point of time, Manish came in. How has been your experience bringing a professional CEO from outside? What did you think would be the challenges in bringing him or her on, and how you think the relationship has now worked? Because today, as much as I read it is like a double engine ki sarkaar (regime or system). So it is working very well for Nazara and all the shareholders. What is it that has worked? What would you advise the entrepreneurs to do if they are looking for one such thing and they are advised to do some such thing? And what are the pitfalls that you may have avoided?
(Blume Team: Manish Agarwal stepped down on 20 October 2022, subsequent to this recording, to pursue an entrepreneurial journey)
Nitish: I think 2015 when Manish came in, me and WestBridge were discussing that we really need to take this company to the next level and increase the management bandwidth because like I said, the opportunity for gaming was seeming a lot more tangible. How it worked well was I, as an entrepreneur, came with my own entrepreneurial instincts on how I ran the business. At the same time, I had just done my Bcom, right, while I started my company, Manish came with a far more professional experience, stronger educational background IIM, et cetera. So he came with a lot more professional approach to the business, lot more structured approach. So I think that one plus one really became 11, right. Combining my entrepreneurial ideas, experiences and thoughts and energy with his professional background that he really brought to the table. So I think that really worked well. I think the biggest pitfall for any such move is again, chemistry, because if these two people don't get along, if there are politics, if they are trying to show each other down, I think that can be any disaster right then rather than being positive for the company, such a move would turn out to be very bad, but I think me and Manish already knew each other from the earlier years. He's the CEO of Alliance Games and we used to meet up once in six months for breakfast, just to catch up and exchange notes, and I knew him for I think three, four years before we even had this discussion. That really helped smoothen the entry and the rest, maybe we will need to have to have a conversation with him sometime to get his perspective.
Arpit: I would love to. So there is knowledge of each other. There was probably mutual respect before you got him on board and what did you do in the first six months, or both of you did in the first six months to build that close working relationship? So that either you are not stepping on each other's toes or you're making sure that things are actually working in the same direction or just to get a lot of alignment together.
Nitish: Yeah, I think one is we treated each other as peers, right? And as twin engines, that was the objective and we wanted to start working together on that. So I think on any discussion, right, right from day one, we set a process saying we will discuss, we will debate everything on data-driven objectivity, right. Not on subjectiveness about who's right and who's wrong, and let's take a decision on what's best for the company. And seven years we've done the same thing till today. We may differ in our thought process on many fronts, but we will have very healthy discussions, very healthy debates, (we) feel free to speak our mind. Then look at each data point and then take a collective call on which is the right direction to go and sometimes you may take a direction which is wrong, but that's fine, right. You will take 10 decisions, two may be wrong. That's fine. I think early on I was communicative in terms of some of the core beliefs, some of the core DNA of Nazara, I would say.
In fact, even before he joined, while we were, I would say, we were engaging, to come on board, I was quite communicative in terms of what is the core DNA of Nazara and what we believe is important for us because I wanted to make sure that there is alignment on those aspects and luckily Manish agreed to those aspects and he, to his credit over the years, he has held those important DNA of ours very close to his heart and stayed true to that. On the other side, I think I gave him a lot of freedom and respect within the organisation to take his decisions and be able to take charge, because if he came in as a CEO, but he would not get that ability to be able to take decisions or even be perceived to be able to take those decisions within the organisation, he would never be successful. I think these are the things that worked.
Arpit: There is always this challenge of people who are working with you now, not respecting a new person or the other way around. He may have brought some people who don't automatically respect you. How do you handle that piece?
Nitish: It's very simple. If the two of us respect each other, then that never happens. That's right, right. But if there's a iota of doubt on that respect between each other, if I respect Manish 90%, he respects me 90%, then the rest, everything will happen.
Arpit: I can imagine. Okay. Super. This is very interesting. There have been a few business calls. One is about entering real money gaming in India, which has regulatory uncertainty, and also the other aspects of build versus buy. Take us through the broader framework of decision making when this happens to you, what you overemphasise, under-emphasise about.
Nitish: So we do have a real money gaming business in India, but it's not very large. We acquired a company called Open Play last year, and we also have Halaplay, which is in the fantasy sports space. We generally have been a little conservative in our approach, and given all the turbulence in that space, all the regulatory shows and clarity on taxation, et cetera, we've taken, I would say, baby steps in potentially what has become a very large business.
Arpit: It has become very large in India. Is that, does it seem like a missed opportunity to you?
Nitish: Possibly. I think we could have been a little bit more aggressive, taken a little bit more chances, but I also realise that sometimes as a company you have to again, like be true to yourself, because you can't otherwise deal with things. It was our DNA of dealing with legal issues, tax issues. So we stayed away, we do feel that it is becoming clearer, which is why we did this acquisition last year, right. And we are also watching a lot of the developments that are happening now, and we may become even more aggressive, do more M&A in that space this year, next year, depending on how things shape up.
Arpit: Excellent. Tell us about build versus buy, because internally people will have ideas, isn't it?
Nitish: Of course, I think our focus today is to really scale up very fast, and in gaming, especially zero to one success rate is very limited, so we are not investing a lot of energy in that. We're supporting all our existing businesses, which are now growing very well organically, and the rest, our focus really is to grow through or by M&A. If there's someone inside who really has a great idea, we could potentially fund them, spin it off, let them become an entrepreneur that we are always open to. But internally, our focus today is to acquire businesses and then work with them to grow them much faster.
Arpit: So this zero-to-one journey in gaming is considered very high risk. Typically, not more than 25% of games are able to get to some success even after spending a lot more time. And that is a journey that Nitish is talking about. And therefore Nitish what you were saying is the 1 to 10 or maybe 5 to 50 journey is what you like to do and logically so, that is more predictable, it is more dependent on the platform and there's so much cross synergy that you can use.
Nitish: But that's also specific to us, right. How we have evolved as a business, we were a zero-to-one business for the first 15 years. It's just in the last five years we have pivoted. So that doesn't mean that the young entrepreneurs who are today starting off in zero to one are doing anything wrong, right? Because that's also where the real huge value creation will happen, and today, the market allows for those opportunities. So I think the takeaway should not be that zero to one is not the right thing to do. I think in our current context of things, we prefer to grow through M&A.
Arpit: Very interesting, changing gears and talking about international. You are a very interesting example - some people call you Tencent of India - of being a gaming powerhouse, not just in India, but across the world. From your perspective standing today, which are the most exciting geographies outside of India that you are going to focus on going forward?
Nitish: Our immediate focus is the US market. We have some very successful products there. It's a evolved market. Propensity of customers to pay is high, ARPUs (Average Revenue per User) are high, scalability is very high, and therefore we are definitely focused on that market. Besides that, I think some emerging markets like Middle East and Africa are also very interesting for us. We do get some revenues from there, and I think beyond India, these markets will grow very fast. Those are the other markets we are focused on.
Arpit: Would you going forward have existing businesses go in those countries or you will want to buy new businesses in those countries?
Nitish: It's a very flexible approach. Gaming is quite universal.
Arpit: That is true.
Nitish: So businesses that are relevant to that market, we will surely take (them) over there. The businesses that we buy over there that are relevant to our market, we will shortly bring over here. So there's no, I would say one rule that fits all on a case-by-case basis. We will keep moving things around.
Arpit: Okay. Let's talk about IPO. Let's talk about the failed attempt. When did you think that it was the right time for you to test the public market?
Nitish: 2017 is the first time when we started thinking of taking the company IPO.
Arpit: What was the reason that you thought that you were ready and when do entrepreneurs think that they are ready for public markets?
Nitish: I think from two-three perspectives, we were running a profitable cash flow generating business. Of course, a lot of new age companies are going, which already have processes, markets have accepted them. But at that point of time, in our mind it was important to be profitable, to take the company public and have some predictability, sustainability on our revenues, et cetera.
Second, we felt from a governance perspective, we were in good shape. Cause going public would bring you a lot into scrutiny, et cetera, and you don't want skeletons falling out of your cupboard, right. So we thought we were quite good on that front. We had E&Y as an auditor for 10 years, so no issues. So I think from these couple of perspectives, we thought it was a good time.
The reason we really wanted to go public is too, I thought Nazara, having been around for so many years already, it was the right time for it to go. And I would say plant the Indian flag of gaming, right, globally. Today Nazara as the only listed (gaming) company in India, a lot of the global companies are aware of us and are looking at us and what we are doing over here because once you’re listed, information is public, people start tracking you, analysts start tracking you. Research reports start coming up. It should become a lot more visible.
The second is, because we chose to go down this M&A route, we realised that if Nazara equity was liquid, the equity we are giving to our founders would become more valuable for them, would also create wealth for them and we could also use this equity to do more M&A, et cetera. These are the two primary reasons we wanted to go public.
2017-18, when we started doing this process, what really helped us is bringing Mr. Jhunjhunwala on board, right. Because it got us known in that whole public market ecosystem. I would say at the same time, it was a new learning for us and took us quite some time to get ready for it. Took us a year. By the time we got ready, the markets were in bad shape and we were really not able to launch (the IPO), so we decided to pull back and decided to focus back on the business and grow it.
That's what we did between 2018 and 2020. Right in the middle of the pandemic, I still remember it was in, I think, August or September of 2020, so the COVID pandemic covid started in March of 2020, I think we decided to take the company public again in August of 2020. This time was a little faster because we had all the learnings of the previous attempt, right. Took us 6-7 months and March ‘21 is when we listed. So it was all done on Zoom. All the roadshows were done on zoom.
Arpit: Was it much easier than the last one? Zoom calls more efficient?
Nitish: Very efficient. I remember prior to the IPO, me and Manish sitting in this room, right, 7:00am - 9:30pm in the night. We used to do 6-7 investor meetings for about 10-15 days.
Arpit: Pre-IPO days
Nitish: Yeah, it was much easier than taking a bag and running in Singapore and London and all of this.
Arpit: Definitely Zoom has helped on those.
Nitish: It was a great experience.
Arpit: I want to talk a little more about IPO journey. In your mind, a private entrepreneur, so many entrepreneurs in our portfolio across the ecosystem are building privately, and then there is a, there is a shift. At some point you're started mentally shifting and about 12 months later you are in the public market, therefore public scrutiny. How does an entrepreneur prepare him or herself about that journey? What are the important things to keep in mind and how do the things change between private and public?
Nitish: Sure. I think when you migrate into becoming a public listed company, one is almost all your information is publicly available, right? Every three months you will do your results. You'll do earnings calls, you'll do analyst calls. So I think a lot of the information becomes public. Second is compliances, SEBI regulations, exchanges. So it's a lot of filing, a lot of hygiene work that needs to be continuously maintained. The good part is Indian markets are quite regulated and quite well regulated, I would say. You need to have a lot more internal policies because UPSI (Unpublished Price Sensitive Information) is there.
Arpit: Insider policies?
Nitish: Insider policies are there. You need to train your teams, be careful of all those aspects, right.
Arpit: Media training?
Nitish: Yeah, so I think a lot of which was not there before, becomes important. But at the same time, I think after being listed for two-three quarters, it becomes hygiene, right. If you have the right teams managing, whether internal and external, it becomes hygiene and you don't keep worrying about it. I think that's important. I think that, from an entrepreneurial perspective or even from the business perspective, what I have learned in the last many quarters of earning calls, I think we would've done 6-7 calls or not, I think it's very important to be transparent as much as possible to investors because maintaining your credibility is I think extremely important.
As a business, you will always have challenges. You may not have the right solutions because you're not God, right, and you may actually be struggling on some front or the other. I think as transparent as you can be with the investors, with the public investors, with the analysts, share bad news faster than good news. I think these things are very important. I think another thing I think is important is not to get trapped in the quarterly race, right, because you have to deliver quarterly numbers. Your intention is to deliver good numbers if you start optimising for that quarter and sacrificing for midterm or long term decisions, and that's very slippery slow, that you won't be able to sustain for very long. And therefore you need to get the right balance there and ensure that you're not sacrificing midterm to long term growth and strategic decisions. And the last thing is you will engage with a lot of investors, a lot of analysts, they will all have their own view. You need to absorb all these views, respect all of them, engage in your own mind and with your own teams with all these views. But it's also very important to remember that all these people have invested in you because they believe that you are the right person to take the right decision. And therefore, it's really important to digest all these views. But then finally take the calls which you think are right so that the business can keep growing in the direction you think is the right way to do it.
Arpit: There have not been (many) gaming companies and generally fewer entertainment companies, which are listed in India. Did you feel at any point people don't understand you and if yes, what did you do to bridge that gap?
Nitish: Sure. I think Nazara, even today, is a fairly complex business, but it's made up of multiple businesses and different investors have different levels of understanding and different investors understand certain parts of the business better than the other. I think it's our job to keep attempting, to make our story as clear as possible, our vision as clear as possible, what we are doing as clear as possible, right. We can't take this attitude of they don't understand that's their problem. I think it's our problem and we need to make our best effort to keep doing that.
That said, Indian markets are maturing very fast, if you saw our IPO, it was oversubscribed heavily. Even though you can say markets were euphoric at that point of time, markets change. Our timing was right. Today we have small investors; Sometimes I'm surprised, I get emails from retail investors who may be holding 10 shares or 20 shares, but they've analysed our entire results, asked very relevant questions, which we love to answer because they make us think as well. So I think investors are maturing in India. They are understanding the potential of new-age businesses. They are understanding that businesses like gaming in the future can be very large and are betting on that.
Arpit: Wow. Lovely advice. I still want to go back to the private versus public piece because that's relevant for a lot of our portfolio founders also. Your company's doing well. It is growing. It has managed to raise a lot of money in the private market, whichever market you're part of. And now people have this fear that scrutiny will come to you, which will not allow you to do things the way you want it to. Mostly it is a fear. I'm not always saying that they have something else on their mind, and then there is a fear of being in scrutiny or in the public eye all the time that comes in the way of them taking the right decision. Maybe going to IPO is not the right decision. That's fine, but going to the right decision comes in their mind. What is your advice to people who are thinking of doing IPO in next one, two years or three years?
Nitish: See, I think scrutiny comes in the way of taking the wrong decision and not taking the right decision. If your intent is to do wrong things, then scrutiny will always hurt you, right? If as an entrepreneur, I want to do related party transactions, which are not up to the corporate governance mark, then going public and being under that scrutiny is a problem. If I'm not doing that, then scrutiny is never a problem. I think scrutiny is only helpful because it makes you reflect on a lot of things you're doing and it may help you take better decisions because you will constantly get feedback, right, from the market on whatever you're doing. And I think any company at some point of time has to grow up and be able to take that scrutiny.
I think in terms of private versus public, when to go public, I think if you have a minimum certain scale in your business, predictability in your revenue and a tangible part to profitability and cash flow generation, then I think it's potentially a good time to go public. Also, if you're able to define why you want to go public, right, is it just because an investor wants to exit? That may not be the right reason to go public. So, if you're able to define why you want to go public, and if you check the box, that governance is in place, accounting books and all our clean, majority of the organisation is there. I think that is the time you can go public.
Arpit: What we have often advised our founders is that when you are thinking of going public, you are making a new commitment because you're entering a completely new market of maybe at least five, if not 10 years, and that is a very important piece. Do you agree?
Nitish: Absolutely; going IPO is not an exit. It's a completely new beginning. It's a reset. And once you're in fact going public and onboarding hundreds of thousands of investors, it's your responsibility to carry them through, build for them, deliver value. So if you're an entrepreneur who wants to sell and exit the business in 2-3 years, then going public doesn't make sense at all. If you want to run this business for the next 10-20 years, create a lot more value, then going public makes sense.
Arpit: In your mind, that was the case about you personally?
Arpit: Okay. That's very important. Nitish, a few questions which are going to be rapid fire like so tell us all about what books you read, what YouTube channel you subscribe to. What have been the latest movies that you see? What is Nitish as a person?
Nitish: Sure. I've, over the years, not been a very avid book reader, but during the pandemic I really started reading books and I've really enjoyed reading books, so I've really doubled down on that. I've enjoyed reading a lot of biographies. I read through Warren Buffet’s Annual Letters from 1965 to 2022. Took me a couple of months to read that, but I really enjoyed it. I've really enjoyed, in recent times, reading the biography of Leonardo Da Vinci, Michelangelo, and all these fantastic artists in those times. I've been reading a bit on stoic philosophy, Marcus Aurelius, and Seneca and all. I'm currently reading the Letters by Seneca, so yeah, I enjoy all of that. I sometimes enjoy reading lite stuff like P.G. Wodehouse which I picked up from my grandfather who was really fond of P.G. Wodehouse. Yes. Right now listening on Audible to the autobiography of Charlie Chaplin. So it's pretty, pretty versatile.
Arpit: Very Interesting. A lot of artists and philosophers and people who are masters of those times and not necessarily connected to business, apart from Warren Buffett, of course. What movies do you like watching? You like Bollywood mostly, or also Hollywood?
Nitish: No, I like all types of movies, although, again, I like watching the new Lord of the Rings show that has just started. So my favourite all time movie is The Godfather. That's like, it is a true masterpiece. I like a lot of the mafia type of movies. So yeah.
Arpit: Narcos would be on your mind? I'm sure you’ve watched it.
Nitish: Yeah, of course. Yes.
Arpit: What companies do you admire? What would you like Nazara to be, let's say 20 years from now?
Nitish: I think a company that is doing the right thing for its shareholders, for its team, and continuously evolving, pivoting, because businesses cannot remain stagnant. They have to take rebirth all the time to stay alive. Otherwise, you die as a business, right? I think Nazara, 20 years later, is alive, kicking, growing, delivering value to all its stakeholders. I think that's a good place to be and forever after that, and forever after that.
Arpit: What food do you like? What is your last meal? What is your go to comfort food?
Nitish: I am fond of Indian food, traditional Indian food, all types. Ofcourse I've tried to be health conscious now, so I don't like to make food a very big priority.
Arpit: Okay. Thank you Nitish for being with us on this podcast. I personally learned so much. There is so much that you have told us about venture building, all the right things to do In making the company successful. So thank you for sharing so liberally and so graciously.
Part of X-Unicorns
What is a unicorn? A mythical creature, known to be proud, untameable, fiercely independent and difficult to capture. When venture capitalist Aileen Lee first coined the term, the definition was strictly limited to privately-held companies valued at over $1 billion within a decade of its existence. This definition was applicable to only a select few Indian companies such as InMobi and Flipkart. That’s all there was in 2013 that fit this definition.
After more than a decade at Blume, it is now becoming clear that India is birthing new variants of this mythical creature and we’re calling them ‘X Unicorns’. But when we look at a Carbon Clean or a Dunzo, they don’t look like typical unicorns. Some look like zebras and hippos, others rhinos, gazelles, and seahorses. They look like they could be any shape or size as long as they have spouted a large single horn or even two for effect.
It doesn’t matter what the path to the unicorn is, it doesn’t matter when they go public, it doesn’t matter whether they have a body of a horse or any other creature in the animal kingdom — as long as it reaches there and we want to look back and celebrate the ones that have entered and are soon entering the X‑Unicorn club. The age of the X‑Unicorns is upon us. Silently, they grow unnoticed and emerge valiantly into the limelight.
Arpit AgarwalArpit is a Director in Blume Ventures' investment team. He is amongst the most passionate people in India on enabling startups. He co-founded Headstart Network, India's largest startup community which touches more than 100,000…
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