Game for growth

One thing which one can say for certain about Nitish Mittersain is that he has his head set firmly on his shoulders. Ask him whether he has arrived, and the 30-year-old founder and CEO of Nazara Technologies pauses warily, trying to spot if there is a pitfall, and then counter questions: "Arrived in what way?"

Only seconds ago, he was describing the blistering growth of the gaming company that he founded a decade ago while still in college. It has been growing at 100 per cent for the past two years and is poised to repeat that performance over the next couple of years. "Anything less than 100 per cent growth would be underperformance," he says.

Nazara is aiming for an operating profit of Rs 15-20 crore on revenues of Rs 50-60 crore in the current financial year. Mittersain is among the few from the first wave of dotcom entrepreneurs who survived the bust of 2000 and are doing well today, having adapted and stayed the course till their ventures turned profitable. Today, Nazara, along with competitor Indiagames.com, is the dominant player in games for mobile phones. It claims to have a 40 per cent market share with over 200,000 downloads of free and paid games daily. Validated numbers are hard to find, though.

Prodded some more, Mittersain finally answers, "No, I do not think I have arrived." Mittersain had started Nazara as an online venture with family money, while still in college (Sydenham, Mumbai), but he changed course in 2003 to make games for mobile phones. Now, with 3G services scheduled for launch later this year, Nazara faces another change in its operating market. Technology consultant Frost & Sullivan expects the mobile games market to grow to Rs 1,500 crore by revenues by 2012, or roughly thrice its current size.

Nazara is readying to ride this wave: it has struck a deal with EA Mobile, a unit of Electronic Arts, one of the world's largest video games companies. EA Mobile owns awardwinning games such as Tetris and Bejeweled, and reported revenues of $212 million (Rs 975 crore) in 2009-10. Nazara now has exclusive rights to distribute the EA Mobile catalogue in India, Sri Lanka and Bangladesh.

"With better devices and networks, there will be a spike in gaming and rich content," says Mittersain, an avid gamer himself. He is also is eyeing opportunities in ad-driven mobile content and social gaming, and plans to raise around Rs 100 crore for acquisitions. "There are many innovative companies both in India and Europe which could help us move into allied spaces such as mobile advertising," he says. He plans to tap investors other than Sequoia Capital, the venture capital fund that has already invested money in Nazara.

Sequoia has invested in Nazara twice since 2005, and its India Managing Director Sandeep Singhal, who is also on Nazara's board, is more than happy with its prospects. "It is going to make a lot of money for us. It is one of the highly successful companies in our portfolio," Singhal says. It was Singhal who called up Mittersain in 2005 after reading about Nazara. The company had survived its initial hiccups on the promoter's steam and it was an exciting business. But Mittersain was just 25 then.

Sequoia's team debated whether that should be a red flag. "He used to carry two mobiles even then and was always playing some games on them. However, he was very mature and he had what it takes to create a company, whether it was hiring seniors, running the finances or writing deals," recounts Singhal.

Mittersain believes the investment happened at just the right time. He was nervous about venture capital investors wresting control, but Nazara gained in many ways. It could introduce new corporate governance benchmarks, and get operational advice and share experiences through Sequoia's global network.

"From Day One, we sat on the same side of the table. There was complete transparency and honesty. We did not hide our problems," says Mittersain. Balu Nayar, Managing Director of Morpheus Media Fund, says a big plus point for Nazara was the fact that it did not raise venture capital early in its life. Nayar had first got to know Mittersain as head of value-added services at Hutchison Max Telecom, an earlier avatar of Vodafone India. Nayar's job then had been to persuade start-ups to look at the mobile telephony market.

Mittersain's business acumen could be attributed to his Marwari roots. But it was not always easy. He remembers his toughest moment: The day he had to trim headcount from over 40 to six or so after the dotcom bubble burst. "The writing had been on the wall for six to 12 months, but I was not brave enough to take that call," he says. Eventually, he reconfigured the company for the mobile business. His early backers were some angel investors who put in around Rs 1 crore. Former banker Brian Brown, who was one of them, believes that it was as much a bet on Mittersain as it was on the company.

A commerce graduate who picked up an executive MBA from Warwick Business School later, in 2006, Mittersain is a curious mix of youth and maturity, with a knack for making friends with people many years senior to him. One of them is actor Shammi Kapoor, 78, whose zest for life Mittersain finds infectious. He first met Kapoor while in college, when he was among the students organising an event to which Kapoor had been invited. (College was also where Mittersain picked up playing the saxophone.)

This skill of making older friends shows at the workplace too. Nazara recently recruited Rakesh Shah, 38, as chief financial officer from Yahoo! India. "I respect them for their professional experience and they respect me for my entrepreneurial experience," says Mittersain.

Mittersain's targets over the next five years are clear. Build a large and 'meaningful' company. And cut a disc of Shammi Kapoor songs on the saxophone. As a budding gaming czar, he seriously has fun. After all, how many people can say that playing Monopoly on the iPad qualifies as work?