Karan Gala

Engineer MBA like everyone | Loves Chai too much

[Karan Gala @KaranGala333]

@harshmadhusudan Ban US social media in India. This is the time.

[Karan Gala @KaranGala333]

@Agent_Oli Thanks. Lovely. How much credits did it cost you?

[Karan Gala @KaranGala333]

@Agent_Oli Really good. Did you give yours and others pic to generate this from higgsfield?

[Karan Gala @KaranGala333]

@Finance_Weights Currently living here, and was seriously considering to purchase given the UDS and Rental yield. But backed out because of issues with the bank. Thanking my stars now, to keep me out of this and grant me the flexibility I have because of not having to pay home loan EMIs.

[Karan Gala @KaranGala333]

Been lucky to witness this up-close to this for over three years

- Using AI to test at scale
- Culture Specific Localisation
- Country agnostic Blockbusters
- And a system of Growth Experiments like the CTR one @RohanNayak2 mentioned

More power to this Rocket ship 🚀

[Rohan Nayak @RohanNayak2]

We grew from ~0 to $500M ARR, adding $250M last year alone while being EBITDA profitable.

1,300-word post on every growth tactic that worked for us:

1. What got us from 0-$400M ARR in the US works in every country.
2. Retention and Monetisation Hacks.
3. Localization > Translation.
4. Experiment with $1M internal seed checks.
5. Pivoting to only AI content production unlocked 100% ARR growth.

Pocket FM is like Netflix for audio-only dramas, with our own pool of one-person studios.

1. Acquisition Playbook for 0-$10M ARR in any country in 6 months

We run a 90 sec video trailer of an audio drama as an Ad and ask users to download the app if they're interested in the rest of the story.

Our core insight after spending >$100M on acquisition is: If the clickthrough rate (CTR) for an ad goes from 2% to 2.25%, our customer acquisition cost (CAC) decreases by ~ 30%.

We remodelled our system around this insight and built an AI-first 2.25% CTR ad manufacturing machine that works in every country.

For every new country, we take our hit shows -> use LLMs to extract and most intriguing moments -> Write a 5-min script combining all the best parts. The first 60 seconds has to have a hook every 5 seconds and needs to end with a crazy cliffhanger to force a download mid-scroll.

If a marketing video is not hitting our benchmarks (2.5% CTR and 55% 3-second through-play), a creative director gets involved to change the hook or cliffhanger to get the numbers there.

AI lets us make 1,000 Ads per show, and in total we do ~17.5k Ads per month. When a business creating scales from 1k to 10k Ads, the normal thing is for CAC to skyrocket. But with what I just shared, we 7-8x'd our User Acquisition budget without increasing our CAC materially.

It took us 8 months to figure this out, but then the timeline from 0-$10M in every country got shorter and shorter:

US revenue grew to $25M in 19 months. (US is now 78% of total)
Germany to 21M in 11 months.
France to $10M in 3 months.

2. Retention and Monetisation Hacks.

We knew we wanted to create an audio entertainment platform, but there was no standard format. For the first 2-3 years, we tried 10 different formats before landing on the winner.

After we got it right with audio drama (8-12min chapters, written for mobile fiction, serialized, episodes have strong hooks and end on cliffhangers), avg daily streaming time went from ~25mins to 150+.

Audio drama made us realize that Pocket FM was creating a whole new medium. There was no playbook for anything that we were doing. Everything had to be thought & built from scratch.
This is what we did for each major bullet:

- Monetization: Users have some free daily minutes to listen; then it's pay per episode. We also added the option for users to unlock episodes by watching ads, which is doing extremely well. Ads scaled from zero to a ~$90M run rate in 12 months.
- Engagement & production: You don't become obsessed with an app you open once a week. To have users engage daily, we make the next episode free every day. Also helps them build the habit.
- Discovery. Huge problem because people consuming Pocket FM enter the app, tap the show, and lock the screen. We fixed it by doing "playlists" of episodes. Once users's free minutes on a show are done, we ask users if they want to pay. If they say no, we play a new show, one where they haven't used their free mins. And we stitch episodes of different shows together that way, creating natural discovery.

3. Localization > translation.

78% of our revenue is still concentrated in the US. Localisation is fixing this: You might write a show for a Spanish audience where language, jokes, folklore, have a certain flavor; if you merely translate the show for, say, a Norwegian audience, that color is lost and hurts the show in the Norway. Listeners would relate more if the show was written by a Norwegian.

That's why, instead of translating, we localize shows to different regions. We use AI to take the spine of stories and adapt their whole cultural layer to the other country.

The results: a US show that was localized for a German audience had 50% higher retention than the translated version.

Localization + our user acquisition playbook led to:
- $10M+ ARR in France within 3 months
- $21M+ ARR in Germany within 11 months.

And this expands writers' addressable market.
We get messages of writers thrilled to have revenue coming from the US, India, EU, LatAm, without them doing much incremental work.

4. Experiment.

We give $1M checks to new internal initiatives, and the team has 12-18 months to prove their thesis. If they prove it, we double down.
This is how Pocket Saga came about, our AI video microdrama app. It's an AI video equivalent of Pocket FM. Same shows and structure, but as a vertical 2-min mobile video series.

We launched it two months ago and it's at ~$15M ARR.

Pocket's broader thesis is to help creators tell their stories to as many people as possible. Start with audio drama -> multiple languages or localize to diff countries -> microdrama -> more formats like movies, TV shows, and games.

Best of all is that writers get revenue streams not only from countries they wouldn't have tapped into, but also from formats they wouldn't have thought possible.

5. Pivoting to only AI content production unlocked 100% ARR growth.

In mid-2024, we pivoted to only AI content production.
Our growth took a very direct hit. Pocket was already at $200M ARR, growing 50% YoY, and we flatlined for a whole semester.

Six months later, the business exploded.

After the switch, we went from ~25k hours of content produced per year to over 2.5M hours, which are also higher quality. Because AI orchestrates the writing and more data is fed into it, more blockbusters come out.
Over 90 titles have $1M+ in lifetime earnings and 13 crossed $10M.

Quality control is done with LLM as a judge, and LLMs are quite tough.
Results are very encouraging:
- 12-month revenue retention went from 44% to 76%.
- In the past year, we added $250M in net new ARR.
__________________________________

Pocket Entertainment (Pocket FM + Pocket Saga) has become the largest AI entertainment platform.

We have the largest storytelling catalog with 770,000 titles, 550k creators, and 5.5B hours of playtime with minute by minute retention & engagement data. We are using all of this data to improve every aspect of our business.

Our Bet: In the next 3 years we will be able to produce Naruto-like series for $1000.

Netflix has to spend $17B to find 100 Blockbusters per year.
What happens when you can produce 1M high quality shows for $1B?

The streaming wars caused a $300B reallocation of market cap.
The AI entertainment wars may be a $1T+ reshuffling of market cap.

We are at a unique spot. Unlike other AI creator tools like Runway or Midjourney, we own both the supply and demand side of AI content.

We've attracted over 550,000 writers who are producing an annualized 2.5M hours of content every year. This pairs with 137B+ minutes streamed.

Because of this, growth is accelerating as we scale further.
We have multiple S-curves inflecting at the same time:

- AI produces better and more ads -> scale faster in new countries
- ⁠Writers + AI produce more shows -> more blockbusters
- ⁠Localisation -> more reach per blockbuster
- ⁠Audio to video format expansion -> larger TAM -> more creators

Every aspect of our business is designed to improve another, and everything is aligned so that the number of blockbusters continues to rise.

If you're interested in building at the intersection of ai, tech and entertainment, DM me.

[Karan Gala @KaranGala333]

@ValueWithPrem Multiple hospitalisations across 12 years across family of 18 would mean always money going from the pocket. This seems to be a foolish strategy unless claims are only towards end of 12 year period when you have accumulated enough gold.

[Karan Gala @KaranGala333]

@kmr_dilip Anyone doing the same with curricular education? Health and Education sectors are ripe for disruption with such plays.

[Karan Gala @KaranGala333]

@TyrantOppressor Manufacturers of food Products also get close to 20-30% of retail price. That's how the value chain is built. Stop pointing issues where there are none.

[Karan Gala @KaranGala333]

@BBMPofficial What the hell is this. Should citizens stop living and existing because of nincompoop politicians and bureaucrats.

[Karan Gala @KaranGala333]

Tax Terrorism

[Congress Kerala @INCKerala]

BAD NEWS FIRST | If your apartment association collects more than 20 lakh maintenance per annum or an individual apartment maintenance crosses 7500 rupee, you've pay 18% GST on your maintenance. Which means that even if you are living in a smaller flat with less than 7500 maintenance, if apartment complex has more flats, then they'll cross 20 lakhs per annum. So you'll also end up pay 18%.

Suppose you live in a smaller society and your 2-bedroom has 6000 Rupee maintenance, and another 3BHK has 8000 Rupee maintenance, then also you'll fall under 18% GST as per the article. Either way you don't miss out on an opportunity in nation building under the dealership of Modiji!

Next the good news (1/2)

[Karan Gala @KaranGala333]

@AmishAggarwala 100% Agreed. Please suggest how can we support legal community against such whims of the state. This is absolutely appalling

[Karan Gala @KaranGala333]

Uncles & Aunties of Socialist India at work in every society "communities"

[Gaurav Gupta | ReraTracker @GauravGupta_RE]

In a city of high rises, our humanity keeps sinking lower. A society collectively fixes house helps rates, a mere Rs 1,000 a month to clean utensils twice a day! Accept or be debarred! We preach fairness, but as soon as people get power, we use it to exploit anyone we can!

[Karan Gala @KaranGala333]

@bhash Why would @kunalkamra88 come and work at your service centres. Completely nonsensical argument. It's your job to plan better and address these issues as a company. Shooting the messenger doesn't help.

[Karan Gala @KaranGala333]

@Sameer_vyapari Try 8 inch mattress from Sleep Company. They have the best back support. Nevertheless it will help not aggravate your problem but the solution is core and back exercise.

[Karan Gala @KaranGala333]

@north_star_says Tanker Drivers are the worst of the lot in Bengaluru. They drive so recklessly within our gated society as well. This isn't a case of one bad apple.

[Karan Gala @KaranGala333]

@arindam___paul Absolutely loved it.

[Abhijit Iyer-Mitra @Iyervval]

The real scandal isn’t that they came up with a foreign TCS. They’ve been trying to screw the middle class over since day one. The real scandal is that the 10th pass bhajan mandali apologias seem less stupid than the UPSC pass donkeys who came up with the scheme.

[THE SKIN DOCTOR @theskindoctor13]

Seven advantages of 20% TCS :

1. Your money will be used for rashtr-nirmaan. If you don't love your country, fine! File a claim—it might take years, but it'll be returned.

2. You won't understand this policy on your own and will seek help from your tax consultant. This will give tax consultants an opportunity to earn a livelihood as well.

3. It will increase domestic tourism by deterring people from going abroad.

4. People will spend less on foreign travel to avoid paying TCS, resulting in savings. Remember, money saved is money earned. Hopefully, the govt will also impose taxes on that "earned money" too.

5. It offers a unique opportunity to feel like a financial superhero, rescuing the govt from its perpetual state of deficit spending.

6. The 20% TCS provides individuals with a golden opportunity to explore their creative side when it comes to tax evasion strategies. Apart from the thrill, tax evasion will generate employment in the IT/ED too.

7. No contribution to rashtr-nirmaan is too big. So, instead of being sad that it's 20%, be happy that it's not 80%.

Add more points in case I've missed any.

[Karan Gala @KaranGala333]

@Nithin0dha You are such a big inspiration on how to build Professional and Personal Life. Big Fan!!!

[Karan Gala @KaranGala333]

@Chitramodi @MehulJariwala8