It's the challenge of a high-tech company serving a low-tech market.
Nickhil Jakatdar's startup delivers video to mobile devices. Sounds straightforward, until you realize he's focusing on countries such as India, Indonesia and Malaysia, where most people have older feature phones and slower networks. (And you thought the YouTube buffering on your iPhone was slow.)
But the potential audience was too big to pass up. In India and Indonesia combined, there are more than 1 billion mobile phones in use, or more than three times the U.S. population.
So Jakatdar's Silicon Valley-based company, Vuclip, turned to the engineering talent at Stanford and other top schools to build video transcoding software that can stream latency-free soccer highlights, TV shows and movies. Vuclip now has 45 million users across the globe.
Making new technology work with old infrastructure is one of the many challenges companies face when expanding globally. As is often the case with developing markets, the opportunities are huge, but so are the obstacles.
The next step for Jakatdar? Getting those tens of millions of users to pay.
In India, about 5 percent of customers pay $2.50 a month for premium content, with about $1 of that going to Vuclip, he said. The rest use the software for free. In countries where Vuclip doesn’t have deals with carriers, it makes no money. Less than a million of its users provide revenue, but he expects that number to grow as the company partners with more carriers in the Middle East and Southeast Asia this year.
Vuclip's mobile video technology competes with offerings from Google's YouTube, Dailymotion SA out of France and Vimeo, owned by IAC/InterActiveCorp.
Jakatdar, 40, who has a Ph.D. in electrical engineering and computer science from the University of California at Berkeley, also faces the task of increasing a global staff. Vuclip has 120 employees spread across six countries. He said he gives special attention to cultural differences when recruiting. Without that, he's concerned the attrition rate will be too high.
In China, for example, prospective employees tend to be less willing to take smaller salaries with the hopes of making big money on stock options, Jakatdar said.
“I've found some very good candidates I had to part with because they had obligations,” and a higher salary was more important to them, he said.
Then there's all the travel that comes with running a global startup. Jakatdar spends half of each month on the other side of the world, away from his wife and three kids. He'll often fly 30 hours to meet with employees, partners and prospective customers.
Last year, just days before he was headed to India, Jakatdar had surgery on his broken leg. He stumbled in on crutches to meet with prospective investors from SingTel Innov8, the venture arm of the Singapore-based mobile-phone carrier. Apparently, it made a good impression: The company decided to lead a $13 million investment in Vuclip.