Abid Hussain Barlaskar

"We have spent zero dollars on marketing": Sandeep Patil, Truecaller

Caller ID app Truecaller recently announced that the company turned profitable. It is now diversifying into a host of other services. Here's an in-depth interview with the platform's MD Sandeep Patil.

Truecaller is solving a key problem for 150 million Indian smartphone users by helping them identify unknown callers. The caller id app alerts users with a notification and also identifies and blocks spam calls and messages. It was created under Swedish company True Software Scandinavia in 2009 when founders Nami Zarringhalam and Alan Mamedi - both digital entrepreneurs in their mid 30s - tried to solve the 'spam' problem for themselves. Few days ago the company announced that it turned profitable, a rare feat for a digital startup.

Alan Mamedi (L) and Nami Zarringhalam
Alan Mamedi (L) and Nami Zarringhalam

The app entered India in 2013 as a caller id service and has since diversified into services like instant chat and digital payments. The platform now boasts 200 million monthly active users globally, of which 150 million are in India. Listed among the 'most downloaded apps', Truecaller has been downloaded over 500 million times. Close to 90-95 per cent of users are on Android phones. Truecaller's global database of phone numbers exceeds six billion.

The Stockholm headquartered company has has an India-focused growth plan. Products and services are developed for India first and are later scaled to other geographies. The platform is run by 220 employees (100 in Stockholm and 120 in India). The company's India hub is Bangalore, with smaller offices in Gurgaon and Mumbai.

Truecaller has made a couple of key acquisitions in India - Chillr (payments company) in 2017 and MessAI (analytics) in 2019. The app also offers HD VOIP calling, flash messaging, instant messaging (IM), payment services (UPI), phone dialler, video-calling, contacts/SMS backup and restore services. Teams at Truecaller are also busy devising ways to connect money lenders to borrowers as a new service.

While Truecaller remains the undisputed leader in the caller id category with little competition, it's on a collision course with apps like WhatsApp (400 MAUs in India), Paytm (140 million MAUs in India) and Olx (50 million MAUs in India) in the chat, payments and discovery segments, respectively.

"We have spent zero dollars on marketing": Sandeep Patil, Truecaller

Roughly 70 per cent of Trucaller's global business comes from India. About 20 per cent of Truecaller's users are in West Asia and Africa, which is the company's next big market. The team is also looking at South East Asia. Latin America is relatively small and has not been a big focus and might pick up in the second half of this year or the next year. Truecaller has steered clear of China for now based on "specfic observations" and is concentrating on India.

For Truecaller, user acquisition is driven by spam protection. Reports suggest, spam warning in India spiked by 15-20 per cent in 2019 which also led to a 25-30 per cent increase in the brand's user base in the same year. Truecaller identified 116 billion between January 2019 and October 2019 globally. Close to 30 billion spam calls and 8.5 billion spam SMS were blocked in 2019 in India.

"We have spent zero dollars on marketing": Sandeep Patil, Truecaller

Around 70-80 per cent of Trucaller's revenues come from ads on the platform. Formats include all the standard banner ad formats of mobile advertising. Inventory is sold directly to advertisers as well as through media agencies. The platform also offers brand solutions basis specific requirements like targeting based on social demographics, etc. It is also planning to introduce video advertising in this quarter.

The rest of the revenue comes from premium/gold memberships and financial services. A premium membership is priced at Rs 37 per month (if paid yearly) or Rs 49 per month (if paid on a monthly basis). A paid account is ad-free, supports incognito mode, has better blocking, users can send more contact requests and also get a premium badge. The gold membership (priced at Rs 5,000 per year) includes a gold themed profile, high priority support along with all the premium features. The platform reached the 'one million paid users' mark globally, last October, and has grown by 20-30 per cent since. It is largely being used a free service for now.

On the B2B front, work on 'Truecaller for Business' is underway; around 20 million SMEs (small and medium enterprises) which are already on Truecaller will be registered as SMBs (small and medium businesses) on the platform enabling better discovery. It will enable users to search for services like plumbers, carpenters, etc., on Truecaller.

"We have spent zero dollars on marketing": Sandeep Patil, Truecaller

Next is priority-based business calls. Caller/spam id is supposed to filter calls from businesses as it's mostly their kind that tend to spam people. With the new service, businesses will be able to highlight high-priority calls, for example, e-commerce delivery calls or calls from say, a bank, about a delayed credit card payment. Though technically placed by companies/businesses, these are the kind of calls users might actually want to answer. These business calls will also be put through the same algorithms that identify spam calls, to avoid misuse.

Truecaller has been recovering from allegations of breaching user data. It is banking on its strong Swedish credentials and the background of strict European data and privacy regulations to convince current and potential users about its credibility.

As per Sandeep Patil, managing director, Truecaller, whom we interviewed in detail this fortnight, this is an ongoing issue. He dismisses the allegations as rumours and denies any data leak on part of the company. "It becomes very lucrative to brand any data as Truecaller data on the dark web since it's a well known brand. We don't find the data to be even related to us," he says.

The Bengaluru-based executive spoke to afaqs!Reporter about the past, present and future of the platform. He joined Truecaller last May, from Flipkart, where, over four years, he helmed several fronts including the home and furniture business unit, the fintech business as head of corporate strategy, and, most recently, consumer and commercial lending. In the past, Patil has global stints with organisations like McKinsey and Capital One Bank.

Edited excerpts.

What began as a caller and spam id detection service now offers instant chat, payments and video calling features - what led to this diversification? Typically, digital platforms with a high user base diversify into video content. But you chose the 'services' route...

Our intuition - that we later validated through research - is that the next set of specific problems and needs were in the area of messaging and calling. We're announcing more launches in these areas - a bunch of them came out last year; some will come out this year.

The next need, especially in India, is around financial services. Crediting is significantly under-penetrated. The plan now is to connect lenders with borrowers through our platform. Subsequently, we will get into other aspects of financial services.

While we are open to new ideas, we want to be true to our roots. Everything we offer - advertising, chat, financial services, etc. - has been built around our core.

"The future of usage and revenue will be a combination of advertising, subscription and financial services, in equal measure."
Sandeep Patil
Sandeep Patil
Sandeep Patil

Profile Truecaller's user pool – what are your monthly active users like and what are they using exactly?

Our users are quite representative of the smartphone users in the country. One in four active smartphone users is a Truecaller user.

Usage of the caller and spam id service is the highest and is what contributes to our overall monthly active user base. But penetration of our other services is increasing. Messaging has significant share and we are now the default dialler on a lot of smartphones. Payments and banking are catching up and will take some time. The future of usage and revenue will be a combination of advertising, subscription and financial services, in equal measure.

"We have spent zero dollars on marketing": Sandeep Patil, Truecaller
"Historically, we have advertised very little."
Sandeep Patil

We have seen very little advertising from Truecaller. We haven't heard of Truecaller discounts and cashbacks either...

Historically, we have advertised very little. We have spent zero dollars on marketing. We don't buy users, we don't buy transactions even for payments and financial services. Our problem is not retention. The core use case continues to be spam id and caller id.

We didn't do a single paid marketing campaign in 2019. We have, over the past eight years, grown organically. We were mentioned in a couple of movies – Gully Boy and Dream Girl – and did not pay for either.

A large share of your revenue comes from ads on your platform. How does it work? Who are these advertisers?

There are two aspects to our appeal as a publishing platform.

We are among the largest mobile display inventories in the country and have around 110-115 million daily active users (DAUs) in India. For each of these users we deliver five to ten impressions per day (around 500 million impressions daily).

From a mobile display perspective, it is one of the biggest properties. Advertising on Truecaller is part of many national launches, and we have seen systematicatic growth on this front over the last several years; advertisers include mobile, auto, and e-commerce brands, among others. It is like a national billboard that you just can't ignore.

But unlike a lot of other platforms, our ad load (ad to organic content ratio) is one of the lowest in the industry. We could have been really ad heavy and exposed our users to a lot more ads, but don't do it, in the interest of our users.

While you lead in the caller id segment, you compete against established players like WhatsApp, Paytm and Skype in other segments. How do you appraise competition?

Call identification is a classic winner-takes-all market, because a user will only have one app for such a service. The core service has always been free for us and I don't see that changing.

I have been a strategy consultant for a relatively long time before joining the technology sector. The way we think about competition itself has changed, with technology coming in. Players are becoming more versatile about being able to opt in and out of digital services. One can't define any one or any few players as competition.

I am asked a lot about getting into the fintech and lending space since there are a lot of established players to compete with there. But to be honest, they are not competitors. They are partners; to build our proposition, we will need their help. This will, in turn, help them meet their profit and reach objectives.

Content and video-led players want users to spend more time on their apps, as that helps them get more advertisers. But for a utility app, screen time is limited, understandably – but you also need advertisers...

Screentime is a relevant metric for content apps that actively try to hold user attention, because if they don't, users will just migrate elsewhere. For us, that's not the case as we are an 'essential' app. We don't actually need a lot of user attention in terms of time spent.

What I need is a lot of mindshare – when users think of a caller id or a spam id app, they should think of us. For financial services, I just need to communicate effectively that 'This the best loan proposition for you'; we don't need to show users hours of content for that. You either need it or you don't. We are more concerned with the number of times we are able to reach a user in a day or a month - that's a more important metric for us.

If you un-bundle our strategy you'll see that our caller id and spam id are tailored to create more touchpoints for users... just like our messaging-calling, payments and lending options. User mindshare is far more important than the classic 'time spent' format. I think those are yesterday's metrics. The world of content is more mature now.

(This story was first published in our magazine afaqs! Reporter on February 16, 2020.)

Editor's note:

There’s a scene in the movie Gully Boy, in which Alia Bhatt’s Safeena asks a friend to look up a number on “true call”. Said friend completes the task in a matter of seconds and coughs up a name and surname. Turns out, Truecaller did not pay for this product demo and landed this ‘earned media’, as advertisers and planners call it, on merit alone. The brand, which was similarly mentioned in a couple of Telugu movies recently, did subsequently experiment with paid integration in Dream Girl, a 2019 feature film helmed by Ayushmann Khurrana.

Although, it’s not the brand’s popularity, but profitability, a recently announced feat, that prompted us to put its managing director Sandeep Patil on the cover this fortnight. In a detailed interview, he spoke to us about his users, his advertisers, his competition, revenue streams, and product diversification plans.

Of these, it’s the last topic that really tickles me. That’s because, over a year ago, I told a colleague, “In less than a decade, everyone will do everything…” At the time it sounded like I, in moment of intense reflection, was channeling Nostradamus, but the prophecy is playing out as we speak, especially in the context of digital products. Zomato serves video content for entertainment, as does ticketing app ixigo. WhatsApp is piloting payments. Xiaomi markets refrigerators.

Truecaller, an app that lets one identify unknown callers and dodge spam calls, is experimenting with services like instant chat, video calling, digital payments, and is also looking to become a discovery platform. Say, you want a plumber to fix a pipe at home – Truecaller wants to be an app you can search for options on. Olx, UrbanClap... are you listening?

In a world where everyone’s fingers are in all pies, how will brands differentiate? I am just waiting for Instagram to start selling flight tickets, Tinder to launch a taxi service and Netflix to give competition to Oyo.

Ashwini Gangal, Executive Editor