When Goliath helped David: part two

Phase two: management buyout

Of one thing, Amit Mehra MBA2001 is clear: despite the small size, Reuters Market Light (RML), the innovative business selling media technology to farmers in India, was a bold entrepreneurial venture full of entrepreneurial risks. Including public failure. 

“When I moved to India in 2008, I took a garage-sized office outside of the main Reuters building. For four years, we worked there like a start-up – and it attracted entrepreneurial talent excited to build something meaningful from scratch. Thanks to the top-level corporate sponsorship, we tactfully – sometimes brutally – cut through any large-company bureaucracy. We built new local processes and even took personal salary cuts to reduce costs. But, the slow adoption rate made two things clear. First, we would have to continually adapt, and second, becoming profitable would take much longer than I’d forecast.”

“The team acted entrepreneurial, but we were still part of a large corporation,” he says. This impacted the ability to develop and retain top talent for the long-haul. The team would demand both the upside of a mobile tech start-up and the clarity of a corporate career. “With Reuters undergoing major changes at that time, I found it hard to give them convincing answers.”

Mehra asked Reuters if he could spin off the company: a management buy-out. He flew to New York and told the CEO in a personal meeting: “I’ll resign from the London office and become a local entrepreneur. The RML team is behind this.” 

It wasn’t easy. There were lots of “near-death experiences” for the business, admits Mehra. But the team kept improving the user experience and kept experimenting. It hit one million registered users in 2012 despite being a feature-phone based product – smartphones were still too expensive for the farming community. 

They took two years to secure equity funding from a local Indian venture-capital fund. They also convinced Reuters of a licensing and equity deal to make RML a local Indian company. Some of the RML team invested personally in the new company. “Thomson Reuters not only bought shares,” Mehra says, “but also put its faith and trust in the team by allowing us to use the Reuters name for two more years.” In fact, whatever Mehra sold to the farmers – local news, weather or market intelligence, all in Indian languages – RML gave to Reuters in English for free. RML got the brand name, Reuters got hyper-local commodity markets content every day. 

By February 2013, when the management buy-out successfully closed, the business operated in 17 diverse Indian states and had more than one million registered farmers in over 50,000 villages. The information it provided covered 400 different crop types, 1,500 different crop markets and 3,000 hyper-local weather locations. It was the largest operation of its kind in the world. “We were the pioneers. And while many of our competitors had folded during this phase, we persisted. It was a hard-won victory.”

Phase three: scaling up the commercial growth 

In 2013, feature phones, upon which the business model was based, were starting to be replaced by smartphones even in remote locations. Mehra’s team hired tech experts who built a cutting-edge product on the Android platform. It included graphs, pictures, radio, chat, listings and many more multimedia features and was given free to the farmers – at least to start with. The main variable cost had shifted from RML (sending SMSs) to the user (data connections). And for the very first time, RML had something it had longed for: live usage data. So the company pivoted its business model and made the Android product free for farmers. “We started making money from sponsored content, native advertising, classifieds and so on. Smartphones – and new technologies like the Internet of Things and Big Data – meant more features and revenue streams were possible.”

RML’s new CTO was hired from Amazon India and the head of revenues came from an ad-tech, digital media background. The board composition also changed. Of his staff, over 95% left Reuters to work for the new company, RML Information Services Private Limited.  

By the end of 2015, Mehra’s team was working with farming groups, rather than lone farmers. In addition to the SMS and Android app for farmers, it was selling analytics products to banks and marketers. The company was leaner, too. Because Mehra raised equity, the cost base was significantly restructured and the organisation more nimble. It had gone from an innovative pilot scheme to a B2C and B2B internet media firm with nearly two million registered users. 

Among the many independent studies on RML, by the likes of the World Bank and USAID, the most recent by LBS found that the price dispersion between markets fell by 12%. 

Inspiration across the decades 

In this story, there is one missing link: Mehra’s original inspiration. He puts the genesis of his RML journey down to the late Professor Sumantra Ghoshal of LBS. 

“Sumantra said: ‘Management doesn’t only have to be right, it has to be good.’ That was really profound. Not many people round the world were talking about shared values back then.” Professor Ghoshal taught Mehra that management needed to be underpinned by both economics and morality. It’s an underlay for everything he and his team have achieved at RML. 

“We wanted to be successful, to make money for shareholders and investors. But we also wanted to see the world a better place. It’s remarkable how a large company like Thomson Reuters had the boldness to incubate and help nurture such a cutting-edge business.”

The company continues to grow today, serving millions of users as a mobile-led media and analytics company. Now, Mehra’s back in London and ready, he says, to start his “next gig”.