Inside Facebook India

THIS AUGUST AND SEPTEMBER, Facebook co-hosted two events with the Federation of Indian Chambers of Commerce and Industry (FICCI) in Hyderabad and Faridabad, where its analysts described to heads of small and medium companies how social media could help market their businesses. FICCI additional director Hemant Seth says Facebook approached them and he thought it would be a good idea to co-host the event. “Everybody is familiar with Facebook’s social [network] part. Most don’t know much about it as a business tool. It’s a good way for a company to market itself to global clients,” he says.

The participants were a motley lot of small auto component makers, textile, plastic, IT services companies, and so on. Their questions centred around how much it costs to advertise on Facebook, what kind of content does one use to promote a company, how Facebook is used for business, how to upload images, what’s a sponsored story (your post stays on top of a page instead of being pushed to the bottom when others add posts), etc. Rajiv Chawla, chairman of Jairaj Group, a Rs 40 crore Faridabad-based auto component manufacturer, says he came awaybelieving that Facebook was a simple, cost-free alternative to running a website. “That [a website] is tedious, expensive, and requires constant maintenance,” he says. Chawla is also chairman of the Integrated Association of Micro, Small and Medium Enterprises of India (IAMSME), a local industry association. He actively promotes it on Facebook, where IAMSME has 2,489 members. For most small companies, says Chawla, IT business tools are an afterthought (“Customer relationship management and enterprise resource planning packages are typically designed for large corporations”) and Facebook is challenging that. And, yes, by his reckoning, FICCI’s Facebook event was definitely a like.

While plans are on for an encore in Indore, Coimbatore, Ahmedabad, and Bangalore next, Facebook’s eagerness to be friends with FICCI shows how it’s reading the India opportunity. Founded in 1927, FICCI is India’s oldest chamber of commerce and has among its members some of the country’s oldest and most conservative companies, many of which are run by business dynasties. It’s the kind of place where Facebook believes it can make a difference, as it goes on its mission of making the “world more open and connected”. (For good measure, Facebook threw in free ads worth $50 or Rs 2,673 for all participants of the Faridabad and Hyderabad events.) Equally, it shows how much effort Facebook is willing to put in to build a business out of India that doesn’t just depend on posting pictures or ‘life event’ updates.

Much of which is perhaps already happening. With over 65 million monthly active users, India ranks second only to the U.S. With China blacked out (see ‘Facebook’s China Problem’, page 95), India is a huge market. Facebook India didn’t disclose revenue, but here’s an approximation: According to its latest third quarter results, the average revenue per user in Asia is 58 cents, which translates into India revenue of Rs 204 crore. Ross Rubin, principal analyst at Reticle Research, a New York-based company that researches consumer technology, says, “Facebook has been challenged to monetise its vast user base even in its home in the U.S. Building a brand in India would be an investment, but there is certainly revenue potential down the road.”

In charge of that is 41-year-old Kirthiga Reddy, head of Facebook’s India operations and ranked 11th on Fortune India’s Most Powerful Woman in Business, up 10 places this year. It’s perhaps no coincidence that Reddy reports to Grady Burnett, global vice president of sales. For the past two years, Reddy has been building both Facebook’s India strategy as well as its team, neither of which has been easy. For all its promise, India requires a different approach—from making Facebook work on feature phones and making it available in local languages, to evangelising it among cautious businessmen. At the same time, an organisation that mimics the Menlo Park headquarters in San Francisco’s Bay Area, not just in structure but also in spirit, has to be built.

Reddy says nearly half her time is taken up by “people matters” (hiring, mentoring, and coaching on strategy and execution). The rest is spent on “strategy and execution in one or two areas where I can make a disproportionate impact”. And she tries to make it to Menlo Park once every quarter.

On one of those trips last year, at a weekly Friday CEO Q&A with employees, Mark Zuckerberg asked Reddy how the India team was doing and how people use Facebook in India. She first pointed out the similarities—using Facebook to upload pictures, chat with friends, and build networks—and then went on to explain that the big difference was Indians were heavily dependent on mobile phones. She returned with a mandate to build a strategy around the mobile theme. She says that the “model flipped here”—users first accessed Facebook on a mobile phone instead of a desktop. “[Globally] Around 600 million Facebook users access the site through mobile devices [up from 376 million last year]. Mobile is the cornerstone of our monetising strategy,” says Reddy.

But, first, she had to make sure that Facebook was available on feature phones (the ones that don’t allow Internet access and fall between basic mobile phones and smartphones). In India, they account for some 95% of handsets sold. So, in 2011, Facebook tied up with Taipei-based MediaTek, a maker of chips for mobile devices, to stamp a technology called MRE (MediaTek Runtime Environment) on feature phones, enabling online experiences otherwise limited to smartphones, says MediaTek India’s managing director Grant Kuo. Facebook hasn’t been alone in pursuing mobile. LinkedIn India, the professional networking company, had 5.4 million users when it launched in India. “That’s grown to about 16 million, with 23% logging in through smartphones,” says a LinkedIn spokesperson.

Almost in conjunction, Facebook rolled out its service in local languages such as Hindi, Gujarati, Tamil, Malayalam, Kannada, Punjabi, Bengali, and Marathi. Globally Facebook is available in 70 languages and more Indian languages are to follow. While Reddy refuses to divulge numbers, read together, local languages on mobiles plus Facebook on feature phones can only mean she is planning on building huge user numbers out of India. The big question: Can she make money from them?

For all the talk of mobile being the cornerstone of Facebook’s monetising strategy, analysts have consistently questioned its abilities to make money on mobile devices. On a call announcing the third quarter results in FY12 results, Zuckerberg said the “opportunity on mobile is the most misunderstood aspect of Facebook today. Most people underestimate how fundamentally good the trend towards mobile can be for Facebook.” Facebook generated $150 million in mobile ad revenues in that quarter. He went on to add that people who access Facebook on mobile have a 70% likelihood of using it on a given day vs. 40% for those who access it on desktops.

Facebook’s engineers have now been given the mandate to figure out smart ways of making money from mobile devices and much of what gets created at Menlo Park will get replicated here. As Zuckerberg says, in mobiles the ads will be more like those on TV, where they are enmeshed in the user experience, rather than being on the side of a Facebook page as it appears on a desktop.

Harshil Karia, founder of Foxymoron, a Mumbai-based social media advertising company that’s worked on Facebook campaigns for companies such as PepsiCo and Cadbury, says mobile will allow companies to target audiences more sharply. “If you want to target, say, Bangalore for a Maggi product launch in Kannada on iPhones, you can,” he says. But the challenge will be that of size. Normal ads on Facebook are of 99x72 pixels and the premium ones twice that. On mobiles, the pictures are less than 30 pixels. So how can you read anything on a screen that size? Reddy doesn’t disagree, but says she’s seen some of the “visualisations” possible on 4G networks and is “excited about the possibilities”. Though 4G is still some time away here, it doesn’t mean her approach to hustle larger Facebook numbers is faulty. She’d rather have them, so that when the right product is in place they can be covered.

Meanwhile, she is chasing business elsewhere. “We see ‘pull’ in terms of developers, brands, and advertisers wanting to understand how to leverage the power of Facebook,” says Reddy. While she declines to get into specifics, she says “revenue, of course, is happening, with ads from Unilever to small and medium advertisers with different models”.

Take the deal with e-retail Myntra, which pays Facebook every time someone clicks on the ads it posts. Ashutosh Lawania, Myntra’s co-founder and head of sales and marketing, says nearly 15% of its sales come via Facebook. “If you click on an ad for Puma shoes which we sell, and are directed to our homepage, and it translates into a sale—that’s what we are looking for.” Myntra has found that one online sale happens every 100 clicks, and for each click, it pays Facebook between Rs 3 and Rs 4. That’s expensive considering that an average transaction is worth Rs 1,500 to Rs 2,000. But as Lawania explains, “Once you get a customer to transact through a Facebook click, the chances of them coming back are higher.” Almost 50% of Myntra’s customers are repeat buyers. “The big benefit is that the entire exercise of reach is based on real people, real time, not theories that may or not be true,” adds Lawania.

Again, last year Mahindra & Mahindra (M&M) used Facebook’s Open Graph—a platform that enables integration of a web page with Facebook, almost to the point of being an extension—to launch Spark the Rise, a programme that awards unique entrepreneurial ideas. “It’s a great way to build a community directly around your company,” says B. Karthik, M&M’s senior general manager for corporate brand management. “We have a little over 500,000 users on our Facebook page for Spark the Rise.” The company is looking to double the number by the first quarter of next year. M&M, too, pays Facebook per click.

AT FACEBOOK’S INDIA HEADQUARTERS in Hyderabad on the 12th floor of Building 20 in the Mindspace business park built over 66,000 sq. ft., the absence of closed cubicles has more to do with accessibility and a level, non-hierarchical organisational structure than just aesthetics. The Hyderabad office is part swanky frat house and part industrial loft. On the flat screen on the walls of the waiting lounge, still shots of visiting employees from global offices pop up, along with their functions: John Anderson, platform ops; Jas Athwal, finance; Revna Albak, user ops analyst; Elaine Yadig, finance, and so on.

“There’s not much difference between Facebook offices anywhere in the world,” Reddy says. “We love it when employees from Menlo Park or Singapore come here and say they feel right at home.” In the restroom, tubes of toothpaste, new toothbrushes, and bottles of skin lotion are lined up alongside the sink. Reddy insists that the office is not a 24/7 work centre, but it’s evidently well-equipped for late or early work schedules. From time to time, Reddy will stop by randomly at any employee’s station or engage them in the hallway to get what she calls “small bytes of real-time feedback”. This tells her how employees are doing. “It is a culture where we don’t wait for a six-month or 12-month performance summary cycle to talk about what’s going well and what can be better,” says Reddy.

She wanted this job. It was in March 2010 that Facebook announced its plan to open an India office. Reddy was at Phoenix Technology, a personal computing company. Phoenix was in the midst of selling some of its businesses and the timing to Reddy seemed “meant to be”. After earning her bachelor’s degree in computer science and engineering from Marathwada University (now Dr. Babasaheb Ambedkar Marathwada University) in Nanded, Maharashtra, Reddy finished a master’s in computer science from Syracuse University and then got her MBA from Stanford. Till she applied at Facebook, she had worked in tech companies—Phoenix, and Good Technology, a mobile e-mail apps company that was funded by Kleiner Perkins Caufield & Byers and Benchmark Capital, and later acquired by Motorola.

For Facebook, she went through 14 interviews—with chief operating officer Sheryl Sandberg, global communications and policy director Debbie Frost, and others from operations, sales, public policy, and social initiatives. The one she remembers most vividly was her ninth, with Dan Levy, global director of small and medium business: Reddy didn’t know whether to be relieved or spooked when he said there wasn’t much more he could ask her after eight interviews and instead suggested she ask him questions. Much of that conversation revolved around Facebook’s culture and the challenges to replicating that in India. Reddy says in India there’s a “default hierarchical culture” where “folks with the most experience are supposed to know best”. Facebook is different, where “we can learn from everyone—and we encourage each person to challenge the status quo”.

In the Facebook universe, culture is huge. Zuckerberg is forever exhorting his cadre to adopt “the hacker way” or “move fast and break things”. That explains why others from Menlo Park also pitched in to build the India office. Reddy started in July 2010, and by August the first “landing team” showed up—seven Facebook execs who stayed on for nine months and whose job was to build Facebook’s cultural foundation in India. In April and May 2011, five members of another landing team visited for six months.

Besides, executives who report directly to Zuckerberg (internally called the M-team) also showed up. The first M-team member to visit was David Fischer, vice president, global marketing solutions. He met key clients and partners, and was the keynote speaker at the first AdTech, a conference around digital marketing, held in August 2011. Another M-team visitor was Lori Goler, vice president, people organisation, who heads human resources and staffing. (Chef Josef Desimone, who was at Google before he was lured away to Facebook’s Menlo offices, also came to India to set up the cafeteria.)

When she started building the team, Reddy would look at 400 candidates before one made the cut, which meant some searches went on for a year, says Shweta Shukla, human resources manager at Facebook India. When Goler was around, she sat on the interview panel. “That was for people with [just] two years of experience,” says Reddy.

The average Facebook India employee is in the early twenties. Shukla says Facebook looks for passion (“for our mission of making the world more open and connected”), talent (“exceptional impact in one or more areas”), analytical/critical abilities, interpersonal skills, and culture fit.

Reddy’s people agenda is mostly about pushing the best ideas to the forefront and executing them at light speed. “It’s about people who can make a difference from day one.” Archana Vadala, a 30-year-old, who was with Google India for six years and is now manager of recruiting for Facebook, says what she likes is that things move fast. “In my first week here, I suggested we go to campuses to recruit analysts instead of waiting for résumés,” she says. From there to implementing the idea, it took just seven days. Reddy talks of another employee who suggested improving chat with more expressive emoticons. Within a few weeks, her idea was rolled out around the world.

FOR ALL HER EXUBERANCE, Reddy knows that building Facebook in India will be a long and hard journey. Colvyn Harris, South Asia CEO of ad agency JWT, says Facebook has captured the imagination of the business world. “But it’s ultimately about how the platform can engage the customer and that’s where clarity is needed.” The point is that in a world of media clutter, it’s hard enough to remember an ad in the newspaper from a day ago, let alone social media. “Recall is one thing, but the other is getting brand marketing and engagement on social platforms,” says Harris.

Reddy says she keeps reminding her team that just 1% of the journey is complete. And that they’ll have to constantly educate companies, marketers, and developers about social media even if the benefits may not be easy to see.