Turakhias: 'The cowboys of the internet' who make millions with little investment

BENGALURU/NEW DELHI: It is not often that Internet entrepreneurs dodge the glare of arc lights to seal deals in the millions, not once but twice over. Brothers Bhavin and Divyank Turakhia, who snagged a nearly billion dollar payout for their online venture on Monday, are that rare breed of founders who in over a decade and half have built a dozen firms, exited five, netted returns of over $1 billion and still managed to stay largely unknown.

And all this, not because they shy away from glitz and glamour. They boast a collection of homes across the globe, snazzy cars and private planes.

Media.net, the latest from Turakhias’ portfolio of businesses, which was sold to a Chinese consortium led by Beijing Miteno Communication Technology Chairman Zhiyong Zhang, has hosted parties for its clients at the Playboy Mansion, famed for being a venue for lavish celebrations.

However, when it comes to work, the brothers have displayed a knack for picking niche business opportunities that require little investment but can deliver maximum returns. “They are the cowboys of the Internet,” said an intimate of the Mumbai-born siblings. “They have a knack for taking advantage of even temporary arbitrage.” The seeds of this talent began to take shape early, when Bhavin and Divyank were still teenagers. In 2001, they teamed up to write a software program to identify generic keywords popular as domain names for their clients.

The dotcom boom was still underway and the commerce students, who learnt to code on their own, spotted a handful for which they paid about a few dollars each. They ultimately sold their portfolio, netting over a few crore rupees. “That was the first big bounty for us, as we made more money in a few days than we would for the year,” said 36-year-old Bhavin.

SPECTACULAR RETURNS THE NORM
Such spectacular returns have become the norm for the brothers, whose Directi Group, which doesn’t have any external investors, is now estimated to be worth $1.4 billion. Directi, the company they launched in 1998 with money borrowed from and since returned to their father, was the first to hit the big time.



Two years ago, they sold the web presence business of the company to Nasdaq-listed Endurance Group for $160 million. On Monday, they pulled off another winner, selling the online advertising technology venture Media.net for $900 million in an all-cash deal.

“This is the mother of all unicorns and entrepreneurs should take inspiration from this outcome,” said Anupam Mittal, founder of People Group, who has known the Turakhias from their early days as entrepreneurs. “(They are showing) that beyond valuation rounds there is another way to build a business,” says Mittal, an angel investor who has backed unicorns such as Ola. The Turakhias on the other hand have created an Internet powerhouse “without raising a single dime from VCs (venture capital funds)”.

The latest buyout is being hotly debated in Internet circles, coming as it does at a time when peers, including SoftBank-backed InMobi, are struggling. Shares of the Shenzhen-listed Beijing Miteno Communication Technology have stopped trading since December 2015. Media.net will eventually become a subsidiary of Beijing Miteno.

Bhavin is quick to downplay concerns, saying that suspension of trading is a “standard process in China when there is a material asset restructuring”.

COMPLEMENTING EACH OTHER
The two brothers complement each other — while Divyank handles operations of Media. net, it was Bhavin who negotiated hard with the Chinese in the final week.

“They had lawyers, tax experts and M&A bankers. But I was able to hold my own, and even counter their proposals citing Chinese laws,” said Bhavin.

Divyank, a hobby pilot, owns a single-engine Cessna and a Cirrus SR22, and is keen on acrobatic flying. Bhavin, a snowboarding aficionado, is only just recovering from an accident that has left him with two metal plates in his left arm.

While Divyank will continue to lead the Media.net business ($426 million of the $900 million for the acquisition has been paid while the rest will be staggered), Bhavin already has four businesses to keep busy — calling service Ringo, enterprise chat application Flock, compensation and benefits play Zeta and registry operator Radix, the most mature of these business where they have invested $70 million. “I plan to make them larger than anything we have created so for,” he said.