She about-turned her startup from the brink of failure. Now it’s doing what Groupon couldn’t

It was the year Groupon tripped – 2011. The world was staring at a tectonic crack in the daily deals model. Businesses were no longer scrambling to give away coupons. And investors had stopped salivating over a plethora of companies riding on a fading craze.

This was a do or die situation for Anisha Singh, founder and CEO of daily deals company MyDala. Her two-year-old startup was on a collision course with failure. She had to think fast, act fast. “It was tough. It was crazy. My second child was just a few weeks old, and my older one, a toddler. But I wasn’t ready to give up on my company,” she recalls. “I was a guilty mom, and a guilty CEO.”

In that tight corner, she took a turn towards mobile – a decision that seemed outlandish when smartphone penetration was at an abysmal five percent in India. That swerve in 2011 saved her company. Today, MyDala has 50 million unique visitors doing 6.6 million transactions per month – 85 percent of which comes from mobile. Every day, 150,000 vouchers are downloaded from MyDala by mobile users. And this Delhi-based company is now gunning to be India’s Meituan, China’s top daily deals company with 200 million shoppers.

After Groupon’s meteoric rise and the subsequent death of the daily deals hype, most of its copycats faded away. But in China and neighboring India, daily deals are still in demand. A couple of months ago, Meituan bagged US$700 million in funding at a valuation of US$7 billion. This came less than a year after a US$300 million series C round from Sequoia Capital and Alibaba. Its rival 55tuan is set to go public in New York soon.

“On Meituan, a power user buys about 50 coupons every month. A power user on MyDala tends to buy about 15 coupons monthly. I am at the juncture where we just want to grow that number from 15 to 50 this year,” Singh tells Tech in Asia from her office in Delhi. Her confidence comes from a unique place – half of the transactions on MyDala come from India’s smaller cities.

“Everyone talks about going to the tier-2 and tier-3 cities. It’s the holy grail. But nobody else managed to crack it so far. But thanks to the network that we built over the years, 50 percent of our transactions come from tier-2 and tier-3 India. This keeps growing, and we have zero competition there,” she says.

A cappuccino in Siliguri, a blessing in disguise

Siliguri is a tiny city in Darjeeling on the banks of the Mahananda River. It is India’s gateway to Bhutan, Nepal, and Bangladesh, but it is far from the eyes of the ecommerce biggies. MyDala’s second big break came from this place at the base of the Himalayas.

To understand why this was such a big deal, we have to go back to where it all began for MyDala. Singh founded it in 2009, with two of her good friends Arjun Basu and Ashish Bhatnagar. This was just after she returned to India from the US and gave birth to her first child. A CEO with a hungry baby at home isn’t most people’s idea of a successful entrepreneur. But Singh already had startup experience behind her and had co-founders she “absolutely love to work with.”

In 2004, Singh had founded Kinis Software Solutions, which gave digital content marketing solutions for Fortune 500 companies in the real estate and e-learning industries. She ran it for five years before moving back home. Before that, she had done an MBA in Information Systems and worked with Centra Software in Boston.

The MyDala site launched in December 2009. Those were the heydays of Groupon and Singh’s focus was on users who love a good discount. “But the more I spoke to merchants, the more I realized that they needed a good place online to market their wares. Restaurants, tattoo studios, salons … all of them wanted it,” Singh recalls. She moved quickly to fill that gap and became an online marketing platform for both big brands and small businesses.

In February 2010, Wharton grad Kunal Bahl and IITian Rohit Bansal started Snapdeal as a daily deals platform inspired by Groupon. A year and a half later, Snapdeal pivoted to an online marketplace.

But MyDala shifted gears to mobile and stayed the course. It built its first mobile app in 2011. “We made a bet that mobile was going to be big. But we also realized that no matter what we did, we needed mass-reach players as partners,” Singh says.

Around then, at a conference in Delhi, Anisha Singh met a senior official from Vodafone. “Vodafone was already a huge telco and was keen to do some innovation. I talked about offering mobile coupons which could be availed by sending a text. We started the service in 2012, and neither of us expected the kind of user response it got. It was overwhelming,” Singh says.

MyDala soon built partnerships with all the major telcos in India. These alliances helped it solve another big problem – how to reach out to mobile users who do not own a smartphone. MyDala’s mobile coupons could be bought easily through a text which would be charged directly to a pre- or post-paid mobile credit account.

Around then, an irate customer called to complain about a cappuccino deal published on MyDala from Cafe Coffee Day (CCD), a popular chain of coffee shops. The MyDala team quickly connected to CCD to ask why the customer wasn’t allowed to claim the offer. “That’s when we found out that the customer was calling from Siliguri. Frankly, we never expected anyone from Siliguri to access MyDala. CCD had just opened up in the city, and the team on the ground wasn’t aware of the deal. The company had expected only its customers in the metros to go for it,” Singh says.

That complaint demonstrated the not-so apparent opportunity in the second- and third-tier cities to the MyDala team.

How does MyDala know what you crave?

India is a price conscious market and the great Indian middle-class is always looking for a bargain. FreeCharge, one of India’s hottest startups, began with this premise. It gifts freebies to users who buy top-ups for their prepaid mobile phones, direct-to-home satellite television connections, or data cards through the FreeCharge platform. It now has over 10 million registered users, and is building a marketing product on top of its current reward-based top-up platform.

According to the Motilal Oswal E-commerce Report 2014, the Indian retail and consumer services industry targeted by coupons stands at US$53 billion. With a market of that size, there are many companies offering daily deals and coupons, like DesiDime, Cashkaro, and Coupondunia.

MyDala is using data analytics as a differentiator in this crowded space. “For us, the challenge was never about getting enough users onboarded. On the contrary, it has been to get our users deals and coupons that are relevant to each of them. For this we have a full-fledged analytics approach. I don’t believe that a bombardment of deals and offers will get us anywhere,” Singh says.

Take for example a consumer’s food ordering behavior. Today you might open a deals app and go for an offer on a Chinese meal. That means you like Chinese food, but since you’re likely to want a change the next day, you will probably order something else you like – maybe a pizza. So even though it may seem magical to you when you see a pizza deal floating up the next day just when you want it, there’s a method in it. MyDala makes its prediction based on all the data it has on each of its users. “For the last four years, we have been building data analytics. For me, the challenge is about making sure that each one of our users is getting relevant deals and offers that they like. It is very tailored. That is our focus,” says the MyDala founder.

According to her, at a micro-level, MyDala’s profiles show what a user tends to buy on a particular day, and what she might like at a certain price-point. On a macro-level, it tracks the spending power of users in a particular place, and predicts what kind of deals will work best and when. “Look at what this kind of insight can do for a small business, which doesn’t have money to burn on market research or marketing. They can come to us and say, “I want users, but I only want a certain kind of users.” Our analytics will help them target relevant users,” Singh says.

From the consumer’s point of view, she is shown offers tailored according to her location, previous buying behavior, and user profile, cutting off the noise.

The company has just announced a new partnership with Airtel to power the telco’s app with deals and offers for customers who use it. So now if you use the My Airtel app to top-up phone credit, pay post-paid bills, or change your data plan, you will be directed to a page called Airtel Surprises – a bunch of deals and coupons, which is being done by MyDala.

Clinton administration and women entrepreneurs

Before falling in love with entrepreneurship, Singh studied arts and communication at the American University. She began her career on Capitol Hill working with the Clinton administration to help women entrepreneurs raise funding.

If entrepreneurship is tough, it is twice as hard for women, thanks to a male-dominated industry. An MIT study on entrepreneurs found that in the tech industry women founders represent less than seven percent of startups that get VC funding.

“Investors prefer pitches presented by a male entrepreneur compared with pitches by a female entrepreneur, even when the content of the pitch is the same. The effect is moderated by male physical attractiveness: attractive males were particularly persuasive, whereas physical attractiveness did not matter among female entrepreneurs,” it said.

Singh wants to change this. But she believes, “The biggest thing holding women back is women themselves. I believe women who are successful should make it their responsibility to give back, encourage, and foster more women entrepreneurs. If more women work at creating a network and leveraging it, it would really be great.” Singh is therefore active in women entrepreneurship networks in India.

She admits that a lot has changed since the early years of struggle. “But I am still a guilty mom and an equally guilty CEO. And I am still sleep deprived,” she laughs. Last year, MyDala turned profitable, while more fancied ecommerce players in India continue to burn their cash – that’s no laughing matter.

By Malavika Velayanikal, Editing by Steven Millward, Siliguri image by PP Yoonus, Techinasia.com