2022 has been a crazy year for Sidharth Rao. Dentsu Creative Bengaluru, which he headed, won the Cannes Lions Agency of the Year – but Sidharth left to start something new. It’s all part of a long, heartbreaking entrepreneurial journey that began at age 20.
July 2016: “Make us famous.” That was the exact instruction Sidharth Rao received from his new boss Ashish Bhasin, who had just taken over as head of Dentsu Aegis in India. The international advertising network has acquired Webchutney Studio, an online agency that Sidharth co-founded (with Sudesh Samaria) in 2013.
Cut to July 2022: Dentsu Creative Bengaluru (formerly Dentsu Webchutney) has become the first agency from India to win the Cannes Lions Agency of the Year, arguably the highest award an agency can receive. This win came on the back of a campaign created by Sidharth’s team: The Unfiltered History Tour for Vice (US news website). It was created during the worst of Covid and focused on objects stolen from around the world that are now in the British Museum.
Sidharth – “Sid” to everyone – gets a message from Bhasin soon after the win. It’s as succinct as the original directive: ‘You have delivered an assignment.’
Ironically, Sid left Dentsu a month before this great triumph. Does he regret not going to the international stage?
“Oh, not at all! I can take no credit for the Unfiltered History campaign other than green-lighting the project. Webchutney has been winning big awards for years, but I’ve never been on stage,” he declares. He had already decided to quit and it didn’t seem right that he should stay just for Cannes and quit a few months later. It would make Dentsu look bad – and it owes the chain a lot.
Pause. “Actually, I don’t even see myself as an adman. I think of myself as an Internet entrepreneur.”
It’s been a wild ride over the past 23 years for this college graduate, the son of a Major General in the Army. “I almost gave up a few times along the way,” he admits.
His story is immensely entertaining as he tells it. It involves downplaying hard work while emphasizing one’s own mistakes. That’s just Sid’s style. Maybe it’s because he suffers from “impostor syndrome”, which he admits to? This condition is defined as “feelings of inadequacy despite signs of evident success.”
After school, Sid got permission from his parents to take a year off while he explored options. He joined DDB Mudra at 19, later moved briefly to Gray where he was fired. I met him around 2000 when we started agencyfaqs! (now afaqs!) and was putting together Gutterspace, a site in the same space. It looked great – “better than agencyfaqs!” he gently taunts me – and it got the job of making websites for businesses. Thus, Webchutney was born.
When he was 20, strapped for cash, he collected Rs 11 crore. He laughs at the amount now, but I find it remarkable that someone so young could raise any money in what was then India. The entire country had less than half a million internet connections.
The Internet was still a child, and Webchutney was one of only a few creative agencies. She won her first Golden Abby for a MakeMyTrip campaign that went viral before “viral” was even a thing. But finding money to grow was a constant problem.
When he decided in 2005 that Webchutney had to be part of an ad network, there were many suitors – “hamare swayamvar main sab aaye”, he recalls with satisfaction. Although the big deal didn’t happen, he got an individual investor on board for Rs 60 crore.
He solved the immediate cash woes, but this particular dark cloud loomed further: he didn’t have enough cash to expand. “And that’s when I dug myself a pretty deep hole,” reveals Sid.
The hole was dug when creative agency Webchutney ventured into media buying for MakeMyTrip in 2007. She bought media worth Rs 1.5 crore per month, for which she was paid in advance, but managed to secure a 120-day credit limit from Google for advertising. . This gave the agency solid short-term positive cash flow that it could use for growth.
But Sid, only 28, didn’t have much financial discipline. When MakeMyTrip decided to move the media buy to one of the ad networks and therefore cancel the deal with Webchutney, the agency did not have the money to settle the accounts. Sid had 21 days to find the money. Or close the store.
In a dramatic gesture, Sid vowed to his desperate team that “they’re going to find the money – and I won’t change my shirt until they do.” Thus he wore the same shirt for 21 days straight – “even though I washed it every night,” he is quick to explain when I wrinkle my nose.
He worked the phone tirelessly like a man with days left to live. Sid is grateful that Rediff’s Ajit Balakrishnan was quick to offer the investment. Looking for a better option, he called Haresh Chawla, the then Group CEO of Viacom18. Time was running out and the two quickly struck a deal: Capital18, the group’s investment arm, would invest 8 million rupees for a majority stake.
Webchutney Studio survived.
Sid can’t stop praising Haresh, whom he now describes as a close friend and mentor, as well as Sarvir Singh, the then head of Capital18. “They were like new parents. They believed in me and let me fly. This is how my belief in myself as an entrepreneur and angel investor grew.” (Sid has made about 20 angel investments so far.)
It was an informal relationship based on trust. And when something went wrong, it earned Sid a sharp rap on the knuckles, most often at Toto’s Garage, a Bandra pub.
Overall, it seems to have worked. When Capital18 exited Webchutney in 2013, it made 3x its investment, according to an official statement at the time. According to Sid, this does not include the 12x return that Webchutney got on its Rs 2.5 crore investment in the Network Play ad network, which was subsequently acquired by German media giant Bertelsmann.
The new partner of Webchutney Studios was Dentsu, which was then headed by Rohit Ohri. How did the change of ownership change his life?
The answer is not what I expected.
“Dentsu got a CFO, Benny Augustine. To be honest, I was suspicious at first. But over time, I realized that instilling financial discipline in crazy people like me was a game-changer.” Profitability started growing year after year: Last year, Dentsu Webchutney/DentsuMB hit a cap of almost Rs 80 crore with an EBIDTA of around Rs 32 crore: things they can’t be much better than a 40 percent margin.
His approach to running the business has also changed. “I worked my ass off for the first 14 years. But gradually I began to embrace the concept of “lazy business” – that is, hire the best people you can and get out of the way. I saw myself as the main HR person at Webchutney.’
And to his angel investments. Many of them were ahead of their time. A few examples: Crude Area, an online platform for selling graphic art; Bombay scum modeled on US gossip site Gawker; JuxtConsult, an online market research company that wanted to be the ComScore for India. The old adage that “timing is everything” is not used.
“This is what I learned about investing: bet money only if you know the founders really well. Or stick with the big boys and invest where they do,” Sid thinks. While most investments have panned out, his big hits have been Pepper Content and ScoopWhoop, each of which he claims has given him a 20x return.
He’s also extremely bullish on two other companies he’s invested in — Invideo, an online video editing platform, and Lio, an app that helps small and medium-sized businesses organize their information. “You’re going to hear a lot about them,” he promises.
What attracts him to angel investing? Is it money? Or what? “It’s the thrill of creating something new. Honestly, I also feel privileged to work with such talented entrepreneurs.”
Sid is already ready to create what he thinks will be his next big thing. Because, as I realized, he can never resist a punt. It is therefore no surprise that his new venture is called Punt Partners, which he co-founded with Bengali serial entrepreneur Madhu Sudhan.
The duo’s basic premise for Punt is that advertising agencies have been helping businesses acquire customers through advertising for the past century. In contrast, marketers don’t have the equivalent of an ad agency to help them retain customers in an era of churn. All marketers have is a smorgasbord of technology companies offering a bewildering array of data storage tools. If Punt takes off, it would be the leading customer retention agency for marketers.
It’s an interesting venture that I expect to hear a lot about in the coming years.