News Corp has been making significant investments in India over the last year, most noticeably in real estate listings company PropTiger, the acquisition of news and data business VCCircle and the purchase of Bigdecisions.com. Last week, the company said PropTiger would be listing its Luxury Real Estate Properties on News Corp’s Mansion Global.
In the second part of the interview, Raju Narisetti, senior vice president at News Corp, spoke with MediaNama about the company’s strategy in VCCircle and tie-ups with Dow Jones for data products, Facebook’s Instant Articles and what it means for subscription models for publishers, and how big decsion
Also read: News Corp’s strategy in India and their investment in PropTiger in this first part of an interview.
MediaNama: You said that you’re looking at VCCircle as a platform to get more data about PE and VC investments in the country. What is News Corp’s strategy here?
Raju Narisetti: The attraction for VCCircle was for two or three reasons. In a country where everybody seems to have written off the ability to monetize content from consumers, this company has been doing that for close to 10 years now. I’m talking about their subscription, premium side. And they have four streams of revenue – a data product, there is content monetization, there’s advertising and there’s events. So you’re talking about four or five types of streams of revenue which is a good business model because advertising maybe challenging, or the economy might not be doing great, there may not be a lot of events to do. End of the day revenue streams will help. It sits in with our long belief that monetizing content to end consumer as well. We tend as a long-term strategic investor place bets on entrepreneurs and founders who want to build their business with us and who have a strong track record. Sahad PV, who is the founder of VCCircle, has that track record of a very ethical, well-run, honest kind of business and doesn’t take any shortcuts in terms of coverage or in terms of activity.
All those things were a cultural fit as well. And clearly, we think there’s an opportunity to grow the business more deeply or broadly in which they already are.
Perhaps they could look for opportunities to see if the data product works for Dow Jones, or if there’s a data product from Dow Jones or outside which works for Sahad or VCCircle to go to the market with here.
As a holding company, News Corp does not insist that our operating companies work together. We just kind of say, “Hey look and say here’s an opportunity and you guys should check it out.” So, Dow Jones and VCCircle will kind of figure out the ways to do things together. The decision is really up to them. We run these companies with strong entrepreneurs and CEOs, look at their profit and loss. We don’t micro manage at the top level. So it’s up to VCCircle and Dow Jones and others to keep their opportunities open.
MediaNama: Could we get some more details about the partnership VCCircle is exploring with Dow Jones? What kind of information will they be trading? And what kind of data will Dow Jones be giving and vice versa?
Raju Narisetti: So VCCircle has one of the largest deep and broad databases on the non-public sectors. Private equity, hedge funds, startups. Dow Jones, globally, has a product known known as VentureSource. It does not have and Indian component or a vertical to it. It has some Indian news in it, but it doesn’t have Indian data.
So, if Dow Jones thinks it’s appropriate and if there’s a market for Indian data which for the VentureSource product, I’m sure they’ll look at that. Similarly, if there’s appetite in India, for the VCEdge customers and say “We’re interested in Singapore, Hong Kong, China or the U.S.”, VCCircle has the opportunity to say we can offer you both those data sets together.
It’s too early as we just acquired the company in April. So it will take some time. You can see those kind of opportunities as well.
I’m not particularly seeing an opportunity in terms of using any of the content, because we believe that each brand and its audience has different needs. So we won’t insist that Wall Street Journal use VCCircle journalism or VCCircle use Wall Street Journal reports. It makes sense to kind of have related headlines on VCCircle that are on the Wall Street Journal about startups. That’s a possibility.
MediaNama: Is it going to be similar to the deal Wall Street Journal had with HT Media’s Mint?
Raju Narisetti: It could. Again, it’s up to Wall Street Journal and Dow Jones to figure out if they want it or how they want it comes to VCCircle and see if they want to share content. The challenge in that scenario would be that Wall Street Journal is a subscriber site and VCCircle is a subscriber site. So it’s not easy as taking the headlines and putting it on each other. So there’s certain mechanics they have to work out. But really, it’s not a requirement or a mandate.
VCCircle opportunity in India is itself fairly big. Just to give you an idea, in the past three months, the quarter we have followed at the close of the deal, their year-over-year (y-o-y) revenues were up by about 65%. Without really doing anything, in the sense we just closed the deal and we’ve just moved them to a new office because they need more space.
My point is that, in India itself there’s a growth opportunity for the brand and the company.We help them with the resources and help them capitalize the opportunity. So I’m less worried about the global integration or what they can do with each other. If it happens, that’s great. But the reason we invested in VCCircle was not because it can help Dow Jones and The Wall Street Journal. It was purely because we thought the VCCircle opportunity itself was a good one.
MediaNama: Could we get the revenues in absolute terms? You said 65% growth y-o-y.
Raju Narisetti: So we’re a $9 billion revenue company. So you can imagine that all the three things we’ve done in India are financially insignificant and will be for a very long time. Those numbers aren’t the reason we did this deal. We look at this as a long-term strategic kind of growth opportunity.
We think that PropTiger business will get pretty large in the next decade or two. For the next particular years those numbers are not particularly there. I wouldn’t call them rounding errors, because they’re important for their own profit and loss statement. But from the News Corp point of view, they’re relatively insignificant.
MediaNama: When you acquired VCCircle, you hadn’t disclosed the size of the deal. Could we know what the investment was?
Raju Narisetti: We are not disclosing the size of the deal. There have been some numbers out there in the market. But again, as publicly listed company we are required to disclose transactions of a certain size. This one did not fall into that category so we don’t have to disclose it and we are not going to.
MediaNama: What is your take on Facebook’s Instant Articles and how paywalls could work with that?
Raju Narisetti: We believe that it’s important to have multiple streams of revenue and monetize the content and our content is worth paying for. By themselves, paywalls are not going to solve the existential crisis of our industry. But it is good to have steady streams of revenue that are not dependent on the economy or consumer spending which is what advertising is.
My view on Facebook Instant Articles is that it makes for sense for advertising-only, free content providers to consider it. For those of us who have subscription models, we are yet to see Facebook, or for that matter Apple, tell us how they will kind of help us support our existing models before we put our content out there.
We don’t see a first mover advantage. We don’t yet feel the need to jump up and say that we’re going to give 30 stories for free. We want to be methodical and careful about how to approach this. If it makes financial, and more importantly, strategic business moral sense, we will absolutely participate. But until that we are in no rush to give away our content for free.
MediaNama: What were the terms of the deal Facebook and Apple approached you with?
Raju Narisetti: Without getting into specific conversations about each of the brands, I think both those companies have announced the terms of the deal. If you sell ads on your own, you get to keep 100% and if you want Facebook to sell ads, there’s a revenue split. I think all of the terms are pretty clear. But none of those terms address subscription models. So we want to make sure we don’t do anything that fundamentally goes against our business model.
Our belief is that free social media platforms that do not produce any content, their business models need to work for us, we don’t need to work for that.
MediaNama: What was NewsCorp’s thought process when it bought Bigdecisions? How does that play into your acquisition strategy?
Raju Narisetti: It’s very simple actually. As more Indians live their lives on digital, a lot of decision making will also move online. There is currently no honest, transparent data provider. In the sense that, a lot of people who are helping you with financial decisions are tied to their revenue models which are based on selling you product.
I’ll give you an example: if you want to buy health insurance or life insurance in India, and if you approach somebody, they’ll try to sell you the maximum life insurance you can afford as they are incentivized and their payments are based on selling you the most. Our view is that it is fine, but there is an opportunity to be a trusted advisor provider of information that is not based on selling you product.
So using proprietary algorithms, we let people provide some information – your income, your age, family, expectations etc. And based on our models, we then tell you that you need this much insurance and you don’t need more. You can of course buy more if you want, but realistically you need only this much insurance. And then give them an option of ten providers that they can go to and do a transaction.
So if you come to us and use our tools and figure out how much you need and go off do something on your own, we are totally fine with that.
Our view was that there was an opportunity to level the information playing field in India in these categories and they are life insurance, health insurance, how much to pay for retirement, education plans and the decision to rent or to buy.
These are all the big decisions which we deal within life. Our view is that most of it will move online and there isn’t anyone who’s providing this. There, the philosophy is very simple, if you help people make the right decision and handhold them and do it honestly, over the long haul the business will make money. I’m not worried about monetizing it right away.
The key there is that we have smart tools and good user interactivity. Users can get these calculators and get them done. It was Manish Shah and Gaurav Roy, the two entrepreneurs, who created it and who have strong background in banking, insurance and financial services. Sitting in their dining room table, they basically built the site and our view was that lets bring them in and help them scale. They have about 18-20 people on the team. The website is available now but we’ll launch it in a more meaningful way some time later this year.
MediaNama: Is BigDecisions looking for tie-ups to directly sell insurance and financial products?
Raju Narisetti: No. We will never sell products because that’s where your ability to be independent of the sales process is jeopardized. We will have partners. We will say that we are vetting 5-10 insurance companies, and we may say that based on your needs, that these guys have the best product. But the transaction is between the user and the insurance company and users have the choice to go anywhere else. It’s not a captive audience model. It’s not a captive product model It’s not any of those.
The business is very simple. It’s a lead generation business. But it’s not based on us selling the maximum product or not based on how much revenue it generates. We just say tell insurance companies these customers seem to be interested in insurance and we’re happy to partner with you and if they come to you, they need to pay us for lead generation. But if they don’t, we’re also fine with that.
There are some businesses where you sell products and some where you sell information. In this case we’re essentially selling the tools to make better decisions and we believe there’s a huge demand for that. We will figure out ways to monetize that but we will not get into selling insurance or selling any product.
MediaNama: Does BigDecisions sell user data to insurance companies to help them sell better?
Raju Narisetti: At the individual level, no data is kept and we don’t ask for names or phone numbers. Whatever data you’ve put in is information you chose to put in. That stays with us. Part of it goes into modelling and calculation of insurance to help give better answers. What we provide to our partner or somebody who sells products is the link where they can interact directly.
But at the aggregate, macro level we put out reports, analytics and dashboards. You’ll see a lot of BigDecisions articles where they talk about trends around what people are looking for. It’s not where I can use a particular data point to sell to you directly.
It’s not a data sales business at all actually. It’s simple business where we provide a lot of answers.
Disclosures: When it comes to tech news and tech related events, VCCircle and Techcircle may compete with MediaNama.