Aparat, a 300 million dollar business

We are talking about Aparat; an Iranian and famous content-based platform which is formed based on the ideas of two brothers.

Shakouri Moghadam brothers that are born in 1361 and 1362. Their capital was a 5 million toman car in 1384 and now their business costs at least 270 million dollars.

If we consider Aparat as the most successful Iranian version of its kind, we should say that now 300 million successful video advertisements per month are shown on this platform.

It has 24 million visitors and works with more than 10,000 sites and applications. Mohammadmehdi Shakouri Moghadam, CEO of Saba Idea, Member of the Board of Directors and Deputy Executive Director of Saba Idea and Co-founder of Aparat talks with Shanbe about formation of Saba Idea and Aparat.

• If we consider the year 1384 as the starting point of your activity in digital area, we in fact talk about the year during which digital and online field weren’t taken serious in Iran. What was your insight about monetizing in online field?

We watched global samples and their income in this field and we didn’t think that Iran is at least 8 years behind in this field and our insight about monetizing was more than what was in reality in Iran.

We thought that we should insist; although there were many difficulties. Our first income from advertisement was 40,000 tomans that we received from an immigration office.

• Wasn’t any successful sample in this field before you?

There was a site named Gooya that provided links of all sites, newspapers and networks and it was very famous.

We saw that it had gained a large volume of Persian web advertisement, thus we became confident to connect to such sites and get ads.

• How much was the most serious and interesting money you received which made you more determined to continue this path?

It has an interesting story. Once I was at university; it was an evening in Ramadan. A man called from Quran fair and wanted an advertisement on the first page of Cloob.com.

We have put tariffs on the site and he paid 840,000 tomans for a month based on that. It was a big money those days. We received the money very fast and it was our first income. This made us to earn more money in this field.

• When did Saba Idea move towards launching Aparat? Tell us about that time and your reasons.

In 1390, we wanted to invest more on social network of Cloob. At that time Facebook as a serious competitor for Iranians, offered many services and its biggest advantage was getting video service from YouTube that we didn’t have and users were interested in our field and thus we had to provide them tools.

Therefore, we negotiated with several companies that provided video platforms so that they offer their video service to Cloob and we claim money from us in turn of advertisement.

Fortunately or unfortunately none of them accepted this cooperation and we came to this conclusion to launch Aparat service despite of all its challenges.

Its most important challenge is bandwidth because bandwidth in Iran is very expensive and if a video service was formed in Iran it must have been hosted in Iran so that it could increase the speed of watching videos by people.

Despite of all these things, Mohammad Javad and I started our work and our main incentive was a domain named Aparat and this name encouraged us to focus on it.

All parts of Saba Idea work in an integrated structure and they are not separated from each other.

We launched Lenzor two years after Aparat when Facebook had bought Instagram and we felt that we can invest on this field but because of the focus we had on Aparat, we didn’t have much time for Lenzor.

• Was Lenzor supposed to become the Instagram of Aparat?

We wanted to expand it like Instagram but we didn’t have the time and thus this project stopped. Although it is still active but we haven’t focused on it.

We launched Filimo in 1393-1394 in the field of VOD. It may become the most serious competitor of our products in the future. Because this approach is a brand new one, it can make the future in this field.

• You definitely faced with challenges in launching Aparat because it is a new field and focused on video; for example bandwidth as you mentioned. Tell us more details.

The main point was bandwidth and hardware. At the same time we launched Aparat, currency price increased and when we wanted to buy equipment we had to pay much more money than we had calculated before.

On the other hand, when you want to be a host in Iran, you should prepare hardware and in this area we faced the problem of continuous filling of HDDs and we had to have stronger process system and buy newer products.

The content produced by friends was different from the content we have now and we didn’t have much experience.

For example, the video loaded by people had big size and we couldn’t show the same video because it occupied much space and it should be converted to a better size.

In addition to technological and software problems, there were issues in regulations of the country that had strict rules for video.

An unknown thing was forming and there were many challenges with different organizations but today we became successful in this space.

• And has Aparat now become the power arm of Saba?

The point is that we implement new advertisement ideas that are being formed one the video field in the world, on Aparat and Aparat can have the most share in the field of digital and advertisement because it offers variety of ad events for the customer.

From banner ads that may be the simplest one to ads in the form of smart click systems or video marketing.

Because the world is moving towards video ads to provide video content with better size to the user.

In fact we were the first ones that launched a comprehensive site in the field of digital ads that had all the conditions and tariffs of advertisement and we provided the first online ad platforms to customers so that they have reports for example that how much their ads have been shown, how many clicks they had and how much their CRT and cost was.

There wasn’t such a figure and statistics at that time and many customers didn’t track it. We provided the possibility of launching digital campaigns for customers in order not to be just an advertising agency a media gives to its customers and in order to create ideas for our customers and share it with them so that they receive more benefits.

• How much does the market know about online advertisement?

I think up to 5 percent of the budget that Iranian brands pay for advertisement, is in the field of digital advertisement.

• Do you have a statistical report about the whole volume of costs for advertisement in Iran and that why digital share is only 5%?

Based on the figures released by IRIB, 1000 to 2000 billion tomans are paid for advertisement in television per year.

We should add advertisements in newspaper, billboards and … to this. Domestic companies and brands prefer TV and billboard ads and don’t know this field completely but the important point in the market is related to the presence of foreign brands in Iran industry that is more aware of online advertisement and in interested more in this space and almost all of them talk about it in their campaigns.

When foreigners enter this field, Iranian competitors would move towards it as well and there would be a bigger market for this field.

• What is the effect of foreigners’ entrance on online advertisement market?

We are making a contract with several big foreign companies so that we can provide the domestic advertisement space in Iran to them and allow them to be present in this field with the aim of bringing currency to the country and we can attract their ads through the platform prepared.

Also we want to use their advertisement platforms and increase our smart production, show the advertisement to the audience more exactly and create better service for the customer; that is, they bring the global knowledge the day to Iran.

In fact, we can make Iran online advertisement market bigger in this way so that other brands that don’t use this system, become interested in it.

• How many Iranian and foreign brands do you work with right now?

We work with more than 250 to 300 Iranian and foreign brands.

• Because the main infrastructure of providing video is Aparat, let’s talk about this platform in more detail. How many videos are there in Aparat right now?

We provide advertising service to our customers with 9 million videos by Aparat each day; everyday 9 million videos are seen in Aparat and we have about 280 to 300 million successful video advertisement for our customers each month.

Out video service is about 4 to 15 seconds. Some people also load their video service with bigger size directly on the site.

We have launched our 15-second service for about a year. Our 4-second service is older and more well-known but this year our 15-second service is used more.

Also we have agreement of cooperation with more than 100 Iranian big sites for which we attract ads and many of advertisement campaigns that are active in the digital field on the sites, are done by us which are mostly determined by a green V in a corner of banner. Right now we cooperate with more than 10.000 sites and applications.

• How many are your users in Aparat and SabaNet?

We have about 40 million unique visitors on SabaNet, Aparat and all the sites that are under our cover according to Google statistics.

• How many visitors does Aparat have?

Aparat has up to 25 million unique visitors.

• How much is spent for advertisement in Iran online field?

In the field of click ads, it starts from 150 tomans per a click. In the field of banner advertisement, we have ads from about 500,000 to 70 or 80 million tomans.

It depends on time and place of the banner, its size, website quality and website rate.

• You mentioned 5 percent share of online advertisement in Iran ads market. Generally, how much is the size of Iran market in the field of online ads?

Without considering Telegram and Instagram that are difficult to process because of the diversity of their branches, I imagined Iran market in 1395 as a market with a volume of 40 billion tomans; from banner advertisement to click ads and every kind of ads that can be called digital advertisement.

• According to the presence of foreign companies and familiarity with Iranian brands with this field, how much can online advertisement market grow in 1396?

I think this market wouldn’t reach to 60 billion tomans this year.

• You estimate Iran market on 400 to 600 billion tomans; how much is your share?

We have more than 40 percent of market share. The reason would be that there is a monopoly for us in fields like video marketing. Or that we have contracts with many media and have their media in our hands.

• During recent years, the topic of investment on startups in Iran was hot; including foreign and domestic. Haven’t investors come to Aparat and SabaNet?

In recent years we had suggestions from domestic and foreign investors. But one of the reasons we haven’t worked with investors was that we believe investment should be taken place when the startup has reached a level of maturity and needs a stronger arm.

We didn’t look for investors’ capital; thus investors should add other values to our business; that is, it doesn’t have just money but it should have technology so that it can help us in different domestic and foreign fields. There are new tools in the world that can make us more dynamic.

• What are the suggestions of investors?

Suggestions have been different percents with different prices. But price hasn’t been the only factor for us. Because partnership is a kind of marriage and money is not all that is important. We are looking for a collection of parameters and our investors should have all those parameters.

• Have Aparat and SabaNet been valued?

Different figures and values have been mentioned for SabaNet; for example 300 million dollars or 270 million dollars.

• Why are domestic investors less interested in investing on Iranian startups?

Because they consider buying is nothing but buying a property and think if they buy what they can’t see, they would face an unknown phenomenon and consider investing on this field as a risk. While for example even prediction of a startup future affects its current price.

• There were issues and problems for Aparat during past year. How did you solve them?

There were complaints from IRIB that were four cases in the field of interrogation that would be solved during next months.

• What was head bug?

Television officials have an imagination about the intellectual property of videos on Aparat. While according to rules, we as a bed don’t have any responsibility toward videos on Aparat until the committee tells us not to put a video on the site.

After that we would be responsible for it. Also according to resolution of high council about social networks, owners of social networks like Aparat don’t have any responsibility towards content and they become responsible when regulatory agencies tell them so.

• Television considers Aparat as its competitor and on the other hand we see that Ayo is being introduced and there are complaints about Aparat. Is Television worried about losing its audience?

Ayo is one of five IPTVs that television has launched and it doesn’t interfere with Aparat. We believe that showing television content on Aparat, television live stream on Aparat and all these things contribute to television growth.

It is the opposite of what our friends think. If Aparat shows television live stream, in fact it attracts the attention of audience to television.

Even we can pay attention to the field of advertisement that television ads are shown via Aparat. Thus television can claim that the number of its audience has increased and even it can increase the price of its advertisement.

We think that we are strengthening television and the more television supports us, it would be in favor of national interests because if television has good content, people would watch domestic television and don’t use satellite.

• So do you believe that people would be attracted to foreign content because of the weakness of domestic content and Aparat can have positive impact on domestic content?

Yes and we know that people look for high quality content.

• According to what you said, how much is Aparat interested in content production?

We don’t have any content production in which Aparat has a role but today more than 96 to 100 producers in Aparat are making programs; that is, they produce the programs themselves and they are only published via Aparat.

In fact Aparat wouldn’t produce any program because this isn’t what we do and no platform in the world enters this field directly.

• How is Aparat making money from content produces by producers?

Producer puts its content on Aparat for free; if content reaches a sponsor, he would become a partner of Aparat and if not, the costs would be paid by the producer and he only can use this web bed.

• According to the status of Aparat in Iran market, it seems that it doesn’t have any competitor. It may have a competitor named Youtube. Is it possible that Youtube comes to Iran or at least it wouldn’t be filtered anymore?

I don’t think that it complies with our country easily in terms of culture and gives the license to operate in Iran market but everything is possible. Thus if it happens, Aparat would continue its way.

• Aren’t you afraid of competitor?

Competitor makes us stronger; the stronger the competitor, the more you try to use stronger tools. The point is that a different idea would create different work.

According to my brother, we are afraid of a young person who sits behind a computer in Neyshabur. We fear that he would have a different idea and attracts a market.

\In the field of advertisement, you can enter with a new idea and take a good share of market. But honestly today everything is more difficult than 10 years ago in terms of the number of people who are active in this field but it doesn’t mean that presence in this field is impossible.

In any case when we talk about market, competition is a part of it. Thus we have our own strategy. Right now many programs produced in Aparat are shown with higher size than the size of programs on Youtube.

This shows that we can operate well in this field so that Iranians outside the country can see them. Thus we are in the right path.

• How is the future of content-based platforms in your opinion?

Usually platforms that have plenty of content, can resist much more over time. For example, during past ten years, YouTube has had the most resistance.

When Orkut, MySpace, Facebook and WhatsApp were created, each one damaged previous platforms but we see that for example Google has been present for many years or in the field of video, YouTube has its own audience.

• What plans do you have for expansion of online advertisement?

We have focused on advertisement very seriously for two recent years and hired many workforces in different fields of advertisement and now we are developing our team so that we can get a bigger part of the market.

Also we have invested on the technology part and try to monitor the recent events in the world and implement it in Iran so that we can do serious jobs in different advertisement spaces.

• How much does site traffic make the base of making money?

Site traffic doesn’t make any person reach to income but unfortunately nowadays most sites use Alexa code to increase the traffic of their sites.

This situation damages the whole industry because when you become the 30 site of Alexa with a click and the customer puts its advertisement banner on that site and doesn’t receive any feedback, assumes that 50 site is in vain because 30 site wasn’t useful.

In fact he doesn’t know how this traffic is created. I wrote an article many years ago with the title of Halal Internet Alimony and I said that we shouldn’t increase or decrease the site rank at any cost.

Some people become the member of our advertisement platform in click field because they can use robots for increasing the number of clicks.

• There is the fever of Alexa rank. What is your recommendation for real click increase and good rank?

We recommend investing on good content because good content would definitely be seen and after that it would attract advertisement towards the site and finally make income.

Our motto is that we prefer walnut tree. Maybe it comes to fruition late but if does, it would be a strong tree that will have fruits for many years. Thus we shouldn’t think of high incomes in a short term.

• Your team is known as a grown up team; but there is a sense of failure and frustration behind this growth and success for sure. Have you even felt failure and wanted to quit?

We failed many times and we had projects that were stopped. But the main point while facing these failures was that we didn’t continue our failure. When you invest on a project and after a while figures show that the project would fail, you should avoid that business.

• Tell us about your failed projects?

We had KaperMarket project that was an internet supermarket and was launched in 1390. We wanted to link Tehran network to a four-digit number so when the customer calls our call center, the factor would come up and the product get packed and delivered.

We worked on its success elements for three months but it failed and we shut it down and activated Aparat. But if we continued previous project, we wouldn’t come to our current success.

• According to you, your status and your share in the market, what would you do if television does something to close Aparat?

We would think about another idea.

• Do you think that if you didn’t tolerate such pressures and there was a better and more open space for working, how many would be your daily visit?

We had at least 15 million visits.

• The space for domestic platforms isn’t open thus this space is more open for foreign platforms; on the other hand for example Aparat should compete with YouTube. What are your challenges in this field?

We are confined in many ways for competition, because in the current situation, domestic audience prefers to use non-Iranian platform.

Foreigners work more easily that domestic ones in Iran. We shouldn’t lose the opportunities. We shouldn’t stop the growth of ecosystem.

We are young people with big incentives for business and all people want to work and don’t have political intention.

The situation should become better because we pay much money for the servers outside Iran and if we connect to international DCN, our traffic would grow 40% in a short time.

It is weird that they don’t pay attention to employment in this field and the employment opportunities people can make for these persons.

For example we have announced that Aparat would go to Arab countries with the brand of ArabLive and its domain, logo and brand are ready and this would bring currency to our country. But the capacities of this field haven’t been taken seriously yet.

Start with an amount of money equals to a Pride!

Mohammadmehdi Shakouri Moghadam and his brother, MohammadJavad, are born in Tehran; they are both married and have two children.

Mohammadjavad has two sons and MohammadMehdi has two daughters. Their first work started in 1383 when they worked in their father’s company; a company named IranSystem in which the younger brother worked in financial department and the older one worled in software and programming department.

This was their first activity in digital field and they decided to invest on this field. The idea of Cloob social network came to their minds those days and they launched it with the initial capital of 5 million tomans which was the money needed for buying a Pride.

Mohammadmehdi says: “at that time I just got married and had better financial situation thus I paid the half of money needed to buy a Pride so both of us had the capital and launched SabaIdea with one of our friends; that is in 1384 and about one year after Cloop.”

SabaIdea idea came to their minds so that they can earn money and supply their costs. Mohammadjavad did programming before launching a digital business that is in 1379 and 1380 and Mohammadmehdi worked in financial field.

When they decided to launch Cloop and SabaIdea, they divided the tasks and Mohammadmehdi became responsible for finance and business and Mohammadjavad took the responsibility of technical and executive issues.

If we assume the Shokouri Moghadam brothers have started their activities in 1383, online business hasn’t been known in Iran those days.

But they looked at successful models across the world. Mohammad Mehdi says: “when I called companies and said I was from Cloob.com, they immediately hung out the phone.

But I didn’t give up and thought that I should get more time for myself and tried to make the negotiation more complicated and for example I said I called from Iranian virtual society.

They wanted to know what Iranian virtual society was and thus there was more time for negotiation. But after 30 seconds, they knew what is was and then hung out the phone.”
In 1386 a policy was made to buy Mihan blog.

They spent all their capital for buying Mihan blog and bought it for 90 million tomans: “this price was very high for that time and for buying a website.

Because we had come to this conclusion that if we wanted to gain power as a digital agency, the media can empower us and the more we own media, the more successful we would be as an advertising agency.”

One year later they came to this conclusion that they should develop this field more but not with the model based on which they invest on buying a media but with a series of websites that worked in this field and wanted to attract advertisement.

They made the basis for a kind of business activity: “in 1387, we did the first contracts for advertisement cooperation between websites and we signed a written contract with each one of the sites that did advertisement activity to attract ads for them.

We also launched a more complete version of SabaIdea which has become a reference of online ads price for all websites such as our websites and the latest advertisement tariffs of all websites were in SabaIdea so that companies could form online campaigns.

That is, they could create their advertisement site in SabaIdea and prepare a pre-invoice and based on which they would be in contact with us.”

He also said that they should always spend according to their income: “even in our previous office the color of bricks wasn’t the same because we have made a part of it based on our budget and at a later time we made the other part of it with a different color.

We pay attention to employment and all our team should be useful. Right now about 130 people cooperate with SabaIdea.

Foreign companies with which we negotiate for commercial agreements, don’t believe this number of work force for all these projects and think that each project should have this number of work force. But we tried to be focused and keep small because we feel that being too big takes agility from us.”

Launching a startup isn’t something that everyone can do!

Even if we say that startup is formed based on idea and failure is a part of the process, it’s better to have a method of entry in this field that is less exciting to avoid plurality of failures.

But the important issue in our country is that everyone wants to be an entrepreneur and all people want to have a big startup and after a short time give over a part of their share for millions of dollars and … but I believe that the most important factor of failure is the short-term vision about this issue in our country.

If all people are entrepreneurs, who should work for entrepreneurs or if a person can’t resist on a startup for six months and doesn’t have enough capital, how can he be a leader so that other people who are cooperating with him feel resistance.

When a startup becomes bigger, there would be a serious disagreement between its initial founders and this leads to the failure of that startup.

Many people also look for big investors from the beginning and wanted a big amount of money to be injected to their startup after only six months from launching it.

These show that they haven’t had a correct plan from the beginning. The growth process of a startup is time consuming.

Another point is that if you haven’t worked for several years, you wouldn’t appreciate the money you earned and thus some people spend the money invested by an investor so easily and immediately because if they have earned each penny of it with pain, they would spend it more wisely.

We think about the number of days we wanted to advertise each one of our products because we have gained each penny of it with pain and one more day means additional cost and we don’t want to waste our money.