Demystifying Audio - The Kuku FM Story

I think the year ending March 2018 will remain probably among the most seminal when future generations look back at India’s economic growth. During the year, India added nearly 240 million internet users. The user base more than doubled to 440 million. Such an acceleration of internet penetration had never been seen anywhere, and despite being in the midst of it all, the sheer magnitude of this event never ceases to amaze me.

At the time, it took me some time to absorb this data, but the one thing that was clear was that Indians would be spending a lot of time on the internet, and that the consumer technology landscape in India would be unlike anywhere else in the world. Four years on, a lot of this is true. Indians consume, on an average, 18GB data per month on their smartphones. This is 4GB more than the average consumption in China, and nearly 7GB more than the global average. India is home to the largest number of digital payments transactions, which just happen to be near zero cost. On a lighter note, 2018 was also the year Kuku FM started.

Before we get too excited, we need to overlay this with demographics, income, and especially, disposable income. Whichever way we cut the data, only a small sliver of users can afford to spend money on non-essentials. Anecdotally, e-commerce today caters to maybe 150 million of the 600 million+ internet users in India. However, the fascinating bit is that nearly 70% of e-commerce GMV comes from the top 5–7 million spenders.

If you are a glass half empty kind of an investor, you would have written-off the rest of the market. Want to build a VC-fundable startup? Just focus on the top 10 million Indians. That’s a great thesis, but I would contend that it’s also well discovered. As we peel the onion a little, there is one facet of India that never leaves me: Indians are hugely aspirational. There is an inherent desire to do better, achieve more, in many ways, defeat the circumstance. The success of some amazing companies in the ed-tech space is a testament to this.

Some of this was the analysis when we first met the wonderful team at Kuku FM. A lot has changed since we first invested in Jan 2020. The company recently announced their US$ 19.5m Series B fundraise, led by South Korean Gaming giant Krafton. I spoke with Vinod, Vikas and Bisu, the co-founders on their journey, and their take on this complex yet nuanced segment they operate in. While this piece has been edited for easier reading in the text format, I do wish we had an audio recording of my conversation with the Kuku FM team. Maybe another time, but here is the interview.

Piyush: Let’s go back to the beginning. Audio is not a space that is well understood by everyone. What were the key insights you had before you started that prompted you to found Kuku FM?

Vinod: Let’s start with what human beings consume as content. There are three major content formats we consume in our day-to-day life — text, video, and audio. Text and video are very recent content formats in human evolution. They force you to sit down and consume. On the other hand, our brains are naturally wired to consume audio: it gives us physical freedom. You can consume it even while you are in motion.

Bisu: In the past two decades, we have solved everything related to text and video content on the internet. There is so much you can consume on the screen while you are sitting with your face glued into the screen. However, if we observe a an average person’s typical day, we notice that we consume a lot more audio-first content along with activities like commuting, kitchen work, jogging, and so on. We haven’t done anything to solve this content consumption on the internet yet, particularly in an emerging market context.

If you connect the dots, the audio ecosystem (phone, smart speaker, smart cars, air buds) is already there. The only missing part is content. This decade is for audio.

Bisu: Most people confuse audio content with podcasts. Actually, the podcast form factor is a very small segment of the audio. Podcasts are simply capsular content in audio, comprising mostly talk shows. Every episode is complete, it has a sense of finality to the content. Audio in its truest form is very vast. You can do audiobooks, educational courses, kids’ stories, religion, live audio, short form/long form content, even daily soaps that can seemingly go on forever.

Vinod: This was the key insight. We wanted to put Audio on the map, and we knew we were onto something very early on when we spoke to hundreds of users and understood what they wanted.

Piyush: Over the past 4 years, maybe more over the past 2 years, what are some of the key areas where the hypotheses that you had at the time of starting up didn’t hold. On the other hand, what are some of the positive surprises?

Bisu: We started Kuku FM in 2018. We have learned a lot, and there is a long way to go. We actually think the way we have arrived at our early product market fit makes for a fascinating story.

Vikas: In our first year, we were iterating on the content format to figure what format works for the Indian audience. We started Kuku FM with a segment we knew well and related to: podcasts. Within three months, we realized that it was not going to work in India, at least not in the form that’s popular in the west. Indian audiences do not relate easily to the format as we have limited exposure to it. There is a historical nuance here. In western markets, podcasts were always relevant on Radio, it is a well discovered format. That is not the case in India. For Indians, Radio meant music, and rightfully so, but that meant that Podcast as a format was not understood at all by audiences.

Vinod: That was when we switched to short form UGC (User Generated Content). We thought we should democratize content creation, have a lot of users putting out content for the masses to consume. That didn’t work either. That gave us a fundamental insight about the space: you cannot consume low quality content in audio. In the video format, lower quality is acceptable because you are consuming two streams with your eyes and with your ears.

In the case of audio, you consume with only one sense, with your ears. If there is even a little bit of noise in the audio, you will get irritated and leave it. We can’t compromise on quality in audio.

Bisu: It wasn’t until sometime in 2019 that we started long form, serialized content, what we call PUGC (pro-user generated content). The other thing we did was that we built tech to ensure highest possible audio quality, while creating content on the mobile phone. We ensured quality for episodic content. We got the highest engagement we had seen till date. In hindsight, it was kind of obvious: we love this kind of content format, most of us have grown up watching soap operas on TV in India. That was our first success in Kuku FM.

Piyush: At the time of our investment, I was really taken by your customer centricity. How important is it to stay close to customers and listen to every piece of feedback in your business? What do you as founders and a team do to keep up with your customers?

Bisu: This is very interesting, actually, something we have focused on from day 1. In the very first version of the app we launched, we had a call button on our Home Screen. Any listener could call us anytime through that button. Every single person in the company was responsible for speaking to our customers; we used to assign calls to everyone in the company randomly. In the early days, everyone in Kuku FM spoke to 3–4 listeners every day. The first-hand feedback we received from the callers helped us a lot.

The feedback was always genuine. People were not only telling us what they liked or disliked, but also what they really wanted on the phone. A lot of this has guided some of the most important decisions we have made.

Vikas: For instance, the content categories and formats we now have are the result of some of these conversations. We have since augmented this process with tech — we gather a lot of user feedback now in an automated fashion, and it really does guide us in what we do.

Vinod: Another thing this allowed us to do was that it allowed us to start asking users whether they were willing to pay for the content, and that led us to what we think was the most important insight till date. Nearly 80% of our users said yes, they would be willing to pay a subscription.

Vinod: We still follow some of these tenets. Everyone in the company talks to users daily. Very simply, we exist just because of our customers. That’s our one key north star, everything else is secondary. If our customers are happy, everything else will follow. We have taken a lot of our learning from Amazon’s customer centricity. We think every company has to live by this principle, but very few founders are able to remain focused on their customers. Founders get distracted by other things like company funding, hiring, culture, strategy, and so on. These are important, but everything starts and ends with your customer.

Piyush: Let’s spend some time on Focus. There are a lot of adjacencies in your business you could have built and launched. There was talk of ‘Hindi Clubhouse’, or live chatting, and several others. As founders, what has been your process for maintaining focus, and how do you translate this to the team?

Bisu: If you closely observe your life, there are very few decisions that really have a lasting impact. The same thing applies to business. We think in our four-year journey, our decision to remain focused will likely be one of these decisions.

The worst mistake any founder can make in the early days is that while you iterate, you don’t completely close your past experiments. You just keep adding new things. That is a huge trap, it creates noise and does not let you discern the signal clearly. Saying yes to things is not focus, focus means you say no to all other things. We learned it the hard way.

Vinod: As we mentioned before, audio is very vast. You can do a lot of things here. We started with podcasts, then UGC content, we also did live audio experiments at a time. Initially we were just adding new features, maybe in some way hoping that if we have a lot of bells and whistles, users will stick. We literally had to sprint to keep up with all that was going on, and we realized we were just managing things and not able to move or add value to customers.

It was almost an epiphany that we took a call and said No to everything and focused on just one thing well.

Vikas: We did it when we started seeing results from our monetization experiments. The data was clear, we were on to something, users were literally telling us the direction we needed to take and paying us for it at that. We said yes to only one thing: monetization.

Now, only the features that will help us get and retain paid subscribers remain on our product board. We shuttered or sidelined everything else. That resulted in the biggest productivity jump in the company. When your company is focused on one goal, it automatically translates down to the rest of the team.

Piyush: Tell us more about your team. What are some of the standout things about your team? How do you keep them aligned?

Vinod: From day one, we are very serious about the size of our team. We are very cautious about not building a bloated organization. Maybe it is well understood now, but we have always believed that small teams of smart people are able to achieve a lot more in terms of output than bigger teams. Each and every one of our team members is a superstar, and we are extremely proud of this.

Vinod: As a digression, this is also the biggest disadvantage of more money. Your first reaction to increasing the output is to increase the number of hands. But that’s not really how any of this works. As the team grows, you build more complex organizational processes, decision making takes time. Things get slower instead of getting faster. Another disadvantage of a big team is you start doing unnecessary things because you have more bandwidth now. You say yes to more things and it is hard to cut back later on. Hence, we are very careful about hiring. Here is our mantra: hire one really smart individual when we need three people.

Bisu: I think Focus on a singular objective also enables strong alignment for the team. Everyone is striving in one direction, and if there is momentum, the team just performs at another level

Piyush: What is your learning model? I know that as founders, you have a yearning to keep improving. What are some of the constituents and practices that help you achieve this? Please also share some of the incidents from your life and career that have a lasting impact on you and how you are building Kuku FM.

Bisu: While your company is growing, it’s like playing different sports at every stage. For example, this year you are playing cricket, next year football, then the year after, golf. You need to learn a completely different skillset at every stage of evolution. It really is like that. What works at the early stage, will not work at the growth stage. And the biggest challenge is while your company is growing exponentially, you can’t grow linearly.

Vinod: If you are aware of this reality and you enjoy the journey then you are always open to learning, you are always curious about what’s next. There are some hacks also around it. You can talk to another founder (read, listen to podcasts) who has gone through this journey before. That helps a lot, especially because it comes with a lot of empathy and relatability.

Piyush: What is your philosophy about competition?

Bisu: There is a famous quote — “When you focus on yourself, you grow. When you focus on waste, waste grows”. Same thing for companies, “if you focus on your customers, your business grows. If you focus on competition, your competitors grow.”

For further reading:

We previously did a spotlight feature on the cofounders of Kuku FM, read it here.

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