By the time he was barely 16, Divyank Turakhia had already founded a tech company with his 18-year-old brother, Bhavin Turakhia.
At a time when the internet boom had just begun in India, the two self-described “tech geeks” took a Rs 25,000 loan ($372) in 1998 from their father, an accountant, to start a company that focused on creating domain names.
Over the next two decades, the duo would go on to build the $1.4-billion Directi, a group of companies with interest in numerous businesses including advertising technology, online payment service and a voice calling and instant messaging app.
On Monday, (Aug 22) the Turakhia brothers added another feather to their cap. Still in their mid-30s, the two are the latest entrant into the so-called “billionaires club.” On Aug. 21, they sold one of their companies, Media.net, which develops products for advertisers, to a consortium of Chinese investors for $900 million. The deal is the third largest in the advertising technology industry.
“Our two public exits in companies in the past few years are now worth more than $1 billion,” said Divyank Turakhia. (In 2014, the duo had sold a part of Directi to the Nasdaq-listed Endurance International Group for $160 million.) “That’s probably why they are calling us entrants into the billionaires club.”
“The funds from the sale will go into a common pool,” Divyank said. “We can then use it to do anything. We don’t differentiate between businesses as Bhavin’s or mine. Consider it as a large family conglomerate.”
Founded in 2010 by Divyank Turakhia, Media.net is among the top five advertising technology companies globally, by market capital.
A Yahoo ad partner, Media.net’s business is similar to Google Adsense, where the system auto-learns and displays the most relevant ads to users based on the web page they are on. In 2015, Media.net had revenue of $232 million, it said in a statement. The company gets 90% of its revenue from the US, 5% from the UK and Canada, and the remainder from rest of the world.
The deal is being carried out in two phases, led by Beijing Miteno Communication Technology chairman Zhiyong Zhang and other unnamed institutional investors. The consortium has already paid $426 million to Turakhia. The rest of the $474 million will be paid over the next few months, after which Media.net will become a subsidiary of Beijing Miteno Communication Technology. “I will keep running the operations,” Divyank said.
Media.net’s deal comes at a time when merger activity in the ad-tech sector has seen a steep decline compared to last year. There were just 43 deals during the first half of 2016, Bloomberg reported, 45% less than 2015.
“We got an incredible amount of interest just because ad tech is a large and growing space and, at the same time, the number of companies that have been successful in it have been limited,” Turakhia told Reuters.
From Mumbai to San Francisco
Divyank and Bhavin started their empire in their shared bedroom in Andheri, a suburb in India’s financial capital of Mumbai.
“We were very interested in coding from a very young age,” said Divyank. Their big break came in 1999, when Nasscom, the industry body for software companies, hosted an event in New Delhi and the two teenagers were called upon to help fix the conference’s connectivity troubles.
“After that, every time some large company had a problem, they’d ask Nasscom, who’d say, ‘oh, there’s this kid we know who can solve your problem,'” Divyank said recently.
Unlike most startups, all the companies of Directi are bootstrapped, which means they don’t have any equity investors.
Divyank doesn’t spend much time in India, and instead shuttles between Dubai and the US. Bhavin spends most of his time in India, where he helps build Ringo, Flock, and Zeta. Both men are still Indian citizens.
Avinash Raghava, co-founder of software industry think-tank iSPIRT, compared the two brothers with Uber’s Travis Kalanick. “Like Travis, they are hackers at heart,” he said. “So their products are seamless. On top of which they know how to run businesses.”
Raghava first worked with the Turakhia duo around 2002 when he was a manager of web services at Nasscom. “Both Bhavin and Divyank are very talented and sharp when it comes to building products,” he said. “You don’t find such strong product guys easily in India.”
So what’s next for the Turakhia brothers? Nothing new, they say, at least for now.
“We aren’t going to touch any new businesses for the next few years,” said Divyank. “Our idea is to build a diversified portfolio.”