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From Wall Street to Dalal Street | Tajinder Virk @ Finvasia
254 Plays1 year ago
Explore the misconception surrounding zero brokerage in this episode. Tajinder sheds light on Finvasia's journey, from his Wall Street experience to the bootstrap beginnings of Finvasia. He also shares insights into disrupting the financial landscape with a portfolio of global fintech businesses based in India under Finvasia's umbrella.
For more such interesting founder journeys, subscribe to our newsletter founderthesis.com
Read more about Finvasia:-
1.Finvasia: The Trailblazing Organisation Led by Visionary Virk Brothers
2.AI is at the heart of our strategy now and for the foreseeable future: Finvasia’s Sarvjeet Virk
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Transcript
Introduction and Zero Brokerage Discovery
00:00:00
Speaker
Hi, I'm the gender work. I'm the founder of Envisha.
00:00:16
Speaker
So here's something interesting I discovered in this conversation. You may think that Zehrodha and other similar online brokers allow you to trade without any brokerage. But that's not the reality. And they charge for certain services. The true zero brokerage app for India is probably Shunya from Finnvasia.
Tajinder Virk's Career Journey
00:00:35
Speaker
And in this episode, Tajinder Virk, the founder of Finnvasia, talks about building a portfolio of global FinTech businesses from India under Finnvasia's umbrella.
00:00:45
Speaker
Stay tuned for Akshay's freewheeling chat with Tajinder Virg as he talks about his journey from Wall Street to bootstrapping Finvasia and building businesses that are disrupting multiple large categories.
00:01:07
Speaker
Okay. Cool. Can you spend a couple of minutes on your journey to becoming an entrepreneur? I grew up in a family here. My father was in service. All of his family members were in service on my paternal side and my maternal side will all businessmen. So the choice was obviously the child what lifestyle like more. So it was fairly obvious. I know it right at the get go that I want to be an entrepreneur.
00:01:37
Speaker
I did my engineering from Punjabi Jinning College and then during my engineering somewhere a lot of my friends start talking about going to US and doing all those things and I was like it sounds like a good idea but if I go there I don't want to go into engineering I'll probably go into finance.
00:01:54
Speaker
I got acceptance into an MBA college in US. Funny enough, I got 100% scholarship over there. Initially started working with the hedge fund. Most of the time spent was in building strategies around mathematical models and how to make money in the stock market.
00:02:10
Speaker
This was for a publicly listed equity. I was 23 years old back then. I went on to work for a family office where we had about $1.3 billion in asset under management and I was their risk manager.
Understanding Arbitrage Models
00:02:28
Speaker
for managing all of those assets. And I met a lot of hedge fund managers like Steve Collins, Dr. Neer Hawker, the famous guy who sold S&P ports all the time. I was lucky enough, at the age of 25, I became Vice President of the Fortis Bank for the Global Equity Markets Diversion, where I, along with three more people, four of us, we were responsible for managing $1.6 billion for the bank.
00:02:51
Speaker
across the world, statistical arbitrage models and pure arbitrage models. What does that mean, statistical pure arbitrage models? You were not doing fundamental research and investing in companies. No, I was not doing research.
00:03:12
Speaker
Given that I was a quant and I was an engineer by background, I looked at stocks as objects. And I felt that these are objects that basically have their own phenomena of interacting with each other. What we call mob psychology could somehow be implemented within the price action behaviors of stocks. Because at the end of the day, if I take out all the noise from everything that I see around me, all that is left over there is demand and supply.
00:03:43
Speaker
And that leads to market microstructure where we see that there are aberrations in the market and we try to quantify these aberrations using mathematical models.
00:03:56
Speaker
And then we would say, how do you quantify these aberrations and put them into a formula that is not backward-looking, that is forward-looking. That is what statistical arbitrage is, causal relationships between multiple financial instruments on their behaviors. And pure arbitrage is essentially where it has to meet three conditions. There is zero risk, you book your profit at the initiation of the trade, and there is no capital involved.
00:04:27
Speaker
That's the fundamental more definition of arbitrage. And that's what we were doing. Well, amazing. What's an example of pure arbitrage? An example of pure arbitrage would be, let's say, for example, if I sell the Nifty future and I buy all the underlying stocks of Nifty at the same time in the same proportion, then I've bought and sold the same security. Nice. Okay. Sell the future higher than the cumulative price of the underlying, then I make a profit.
00:04:59
Speaker
Okay, interesting. So you were doing this strategy. You had about a billion plus dollars under management.
Challenges in Bringing Fortis Bank to India
00:05:08
Speaker
So the whole thing, you know, came together. I had this edge to come back to India. I started discussing with the executive directors of a photos bank with the top management. I made a trip to Hong Kong. I made a trip to Brussels. Brussels was their official headquarters. And I told them that this is what I want to do. Why don't you, you know, let me drive for this India as a venture.
00:05:33
Speaker
They all got very excited about it. I was able to convince them and they put a team of legal with me to start working towards launching Fortas in India because they saw my results. They saw that I was doing and delivering. And back in the days, there was more risk taking capacity. This was right before the financial crisis. We came to India, we started, we filed for incorporation in India and we realized there's something called Fortas Healthcare in India already.
00:06:02
Speaker
Well, Fortis Bank was like a 110 years old bank. It was the second biggest bank in the world at that time in terms of revenues. And then they had to get into lawsuit with Fortis Healthcare. And I don't know what happened at that point. They realized that, you know, maybe this kid is too young. We have to take the things into our own hand because India sounded very promising. I did not like the whole idea of being sidelined just because I'm too young.
00:06:30
Speaker
I don't think that's just the only reason. I think there were other things that came together. When they saw this, they probably discussed among other people that they know in the industry, and then they realized that the best thing to do is to do an acquisition. And they found a target to do acquisition AB and AMRO. That's when AB and AMRO got bought in. And because I was not part of the whole process, I quit my job.
00:06:55
Speaker
And they bought Evian Enrow's wealth management division, is it? Essentially, Evian Enrow was bought by a consortium of three banks and Fortas was one of those banks. And during the acquisition and post acquisition, how they split was different ballgame because then the financial crisis hit the market.
00:07:20
Speaker
People didn't have the money that they thought they have. And then things went sideways. But good for me, by that time I was out of the bank.
Founding of Finvasia and Zero-Commission Brokerage
00:07:30
Speaker
Right, okay. Then what next year, out of the job? Then I started discussing with my brother. I joined another hedge fund, which was an India-focused hedge fund. And my goal to him was, boss, I want to go to India. Back then, I was making half a million dollars a year in my take-home a year. And my brother was getting paid like over $150 an hour.
00:07:50
Speaker
and he was a management consultant consulting for Pepsi and those guys and then while we were discussing I met this hedge fund owner who had an India focused hedge fund and I was like I want to go to India I'll try working with you and if things fall in place we'll do something together otherwise I'll start my own business so I spoke to all these hedge funds and banks that I've worked with I was like we'll manage money for you from India
00:08:17
Speaker
and will manage money for you across the world doing arbitrage, statistical arbitrage and given our history and performance, they agreed. And we had quite a sum of money to manage for these banks and hedge funds and we started from Asia. So, Asia started as a wealth management business back then.
00:08:38
Speaker
So we set up in Chandigarh a small office. There were only four people in the office and I was like, we'll manage. Let's see how it goes. Before you start, I have a couple of questions here. First of all, what's the hedge fund? How is it different from portfolio managers?
00:08:56
Speaker
Hedge funds are in a way wealth management firms that differentiate themselves that they will only manage money for a very high net worth individuals. The minimum back then in 2005, you had to be worth at least $5 million and making at least a quarter million a year to qualify for a hedge fund to take money from you.
00:09:16
Speaker
And they would only work with these kind of individuals. They would deploy scientists and mathematicians and physicists to build their strategies. And the goal was to beat the market, outsmart the market by taking as much risk. Because once you're wealthy, you don't want to lose money. Is private equity and H1 similar?
00:09:40
Speaker
No, they are different. You can have a hedge fund working in private equity space. So private equity is, I would say a subclass of a type of investment, which could be done either via hedge fund or via larger investment banks.
00:09:59
Speaker
Why would a hedge fund outsource money management? Because that's the core business, right? Why would they outsource it to you? That's the engine which runs the machine. Yes, I mean, a hedge fund is not a hedge fund if there are people over there. If you think about it, every business is a business because there are people over there and they have certain value. When we say a hedge fund is managing money, it's actually the people in the hedge fund who are managing it.
00:10:28
Speaker
And given that they've seen the performance that I had, it wasn't easy to convince because all of my performance was audited in a way. It was at the bank or at a hedge fund. So, you know, there was a proof of what I have delivered. And then I guess also because I was at a lot of seminars being a panelist and describing, so I was very visible.
00:10:54
Speaker
to these guys and they felt it's obvious. He wants to live wherever he wants to live, manage the money for us, stay within our mandates and that's it. And you take your money and we take our money.
00:11:07
Speaker
So, you know, I watched a series called Billions. It seems like the hedge fund industry is a lot about star managers. I mean, everybody is always seeking out those star managers who deliver better than market returns. It's very, very people-driven kind of a business, basically, reputation-driven rather.
00:11:29
Speaker
Indeed, it is. You know, hedge funds are always looking for those stars who can deliver. And once they find it, they will do anything to keep him happy. You know, like the rock star of Wall Street. That's what we felt back in the days. You know, I would wake up, go to the office. I feel like I want to sell $100 million worth of share of Lehman Brother. I don't have to call my CEO to do that. I'll just do it.
00:11:52
Speaker
So it was that rock star feeling. So because you were a star, you had a reputation, so therefore people trusted you with the money, the hedge funds trusted you with the money. And what did that involve operationally? Like you set up an office in Bali, what did it involve? Like researching and taking Jesuits and then executing those Jesuits? By and large, mathematical models were built.
00:12:17
Speaker
I had built those mathematical models and I was working on it. My brother was more a management guy. I'm more of a quant and technical guy. So he was taking care of how the operations will happen. We used to trade from Australia. Australia opens five o'clock in the morning and US closes 2.30 AM next morning.
00:12:39
Speaker
And we were trading almost 18, 20 hours a day, so people have to be split across, execution has to be done, reporting has to be done. And it was, so like I said before, it was both a good and a bad decision to be safe. Somewhere or the other, we felt like, wow, amazing. I'm still making a lot of money sitting in India. It's like, best of both worlds. But there was not enough. It didn't feel like you're doing something.
00:13:09
Speaker
In what sense? You would be making less money than if it was your own hedge fund. Was that what you were feeling? If you were running a hedge fund yourself, you would make more money than doing it for other hedge funds? That dissatisfaction because at large people don't understand finance and then the second thing we realized is we are not solving a problem.
00:13:31
Speaker
Because if you're solving a problem, people tend to recognize you, they tend to know you. And over here, I'm solving a problem for a very small group of people who are not even living in India. And it just did not make the cut. So I said to my brother, let's look at something else. Let's do something.
00:13:52
Speaker
You know, what do you mean? And the good thing that happened is while we were going through all of these, what should we do? How should we do it? At the end of the year, we saw balance sheets and we saw that, holy crap, we paid so much money to all these brokers over here. You know, and just if we did not have to pay those brokers, we would have made 10 times more or maybe not 10 times, two or three times more money. And you're talking about Indian brokers or globally? Globally as well as India. Okay.
00:14:21
Speaker
But since I was sitting in India back then and I was like, okay, what do we do? So we said, okay, you know, first thing is we have to stop this cost. Let's get a license, you know, and let's stop being any broker in India. Then we went on, we started applying for licenses.
00:14:43
Speaker
I don't remember. I think in 2010 or 2011, if I remember correctly, something like that. And you started this out in about eight or nine, I guess. 2009. Nine, you started. Okay. All right. So two years after learning that, you decided to get a broker license in India.
00:15:02
Speaker
Exactly. And that was purely to serve ourself. Then within the office, when you have smart people around you, they bring smart ideas. And someone said that, why don't you start a brokerage? Since you are getting a license, you're going to set up all the operations and every single thing. And then I spoke to my brother, I'm like, you know, if we have to do this brokerage thing, then let's just do it a little bit differently. And then we started discussing.
00:15:27
Speaker
We launched the brokerage, so we started managing our own money with the one license we got. We had more muscle power to tell the broker, we'll only pay you this much while you get the second license. And somewhere or the other, we said, let's get our feet wet. Let's launch a brokerage product in the market. Let's not try to innovate anything over there and see if you want to do this business or not.
00:15:53
Speaker
And when we looked at it and we were like, wow, yeah, it makes sense. Someone told me, you know, one of the guys I met back in the days, he's like, you're trying to get into the brokerage business. You know, this is a dying business. I was like, no, this is not a dying business. This business has already died. This business died in 1987 when the crash happened. When E-Trade and Charles Schwab and Ameritrade, they took over all the traditional brokerages in US. This business was back then.
00:16:22
Speaker
And if you're still thinking of brokerage as a business, we are living in an old world where essentially, personally speaking, and just purely my personal opinion, I think anything that has to do with middlemen is not a business. A business is not a business unless it solves a problem. It has to solve a real problem. What's a real problem? The problem is within the financial industry,
00:16:49
Speaker
Your raw material is money, your end product is money. What do you do in between is your product. Do you take $100, make it $120? Then you made the final product. But if you take $100, you take $10 of commission out of it, and then you start making money on top.
Financial Inclusion and Economic Growth
00:17:09
Speaker
It just doesn't make the cut.
00:17:11
Speaker
And then the unanimous decision from me and my brother was, this industry is already dead. Let's put the last nail in the coffin. Let's launch a zero-commission ecosystem in India. And that's how Shroomia, so to speak, came into existence.
00:17:30
Speaker
But that's, like I said, the itch to keep on doing something led us to do all the other things that we did after Shumya. But that was sort of the, you know, the transition, slow transition into the obvious thing that an engineer could do in a finance world. When did you launch Shumya? I don't remember the numbers exactly. I believe we launched our first version or avatar of brokerage business in 2012, I believe in that
00:17:59
Speaker
ballpark when we were experimenting. Then in 2015, we launched what is now called Xunya, the zero brokerage ecosystem. And it was not just a zero brokerage. Even if you give zero brokerage, you have to pay a clearing fees, you have to pay for technology, you have to pay for tens of other things.
00:18:20
Speaker
So we went on, we became professional clearing members and you know, we built our own technology and we said when Vinvasia says its product is zero commission, it has to be zero commission. No administrative charges, no clearing charges, no volume trade charges, no surprise charges, nothing. Zero means zero. You come, you trade, you go, you take your money.
00:18:43
Speaker
So that took a little bit of a while to engineer and get all the relevant licenses. So I think 2015, August, 14th of August, 2015 was when we lost. The Independence Day. Give me a broad understanding of what's a brokerage business.
00:19:04
Speaker
Brokerage, you mean financial brokerage, financial commission business basically. Yes, equity like the equity trading commission business. Let's say you open an account, a DMed account or a trading account with any broker. Your journey starts with you pay a certain fees to open the account, sometimes $200, $300 as an administrative fees. You deposit money over there and let's say then you go and buy a stock or a future or an option.
00:19:33
Speaker
When you go in a buyer's door transaction, there is a commission that the broker charges you. Could be a variable fees X amount per crore of emotional value or Y dollars per ticket charge like a flat fee structure, something or the other on that lines.
00:19:50
Speaker
Then there is a clearing charge that you have to pay because the broker pays to the clearing member. So the broker will pass you on this clearing fees. Could be 10 or 20 rupees per crore or something like that or sometimes of minimum flak fee. Then there could be other charges. If you call the broker and the call-in trade charges, you're calling the broker and you are
00:20:15
Speaker
giving the order over the phone. And then there could be monthly annual maintenance charges to your credit accounts. Or sometimes there could even be a minimum monthly charge because you're using their technology like pay 2,000 rupees a month and then you can trade this. So all these different types of charges come together. And that is one of the major parts of the earnings of a broker.
00:20:44
Speaker
When we look at all of that, none of that made sense. And we said, let's just make everything zero. There should be no account opening charges, no enrollment charges, no call-in-trade charge, no technology charges for using our trading platforms or anything like that. No clearing charges, no administrative charges, no commission. When we say zero, it should mean zero. And that's where we famously say that Arya Bhattaya gave Shumya to the mathematical world.
00:21:14
Speaker
and we give that Shunya to the Indian financial ecosystem. The zero means zero. And it's very important if you think about it and why I see that it has solved a problem. The reason why Shunya is what it is today is because just a few things. It's not that we have built a rocket that will take the stock market to the moon or to the Mars. What we've done is we said
00:21:41
Speaker
Let's eradicate this middleman because sending a message from my server to the exchange server does not cost anything. Just like sending a WhatsApp message, just like sending an email, it's an electronic packet that's been sent from one server to another that costs maybe nothing, almost nothing. If you don't pay for WhatsApp, you don't pay for using your email or things like that, why do you have to pay for sending this data packet to the exchange?
00:22:12
Speaker
And if you think about it, let's say a mathematical example, let's say you are a trader, you have one lakh rupees in your trading account and you want to trade, let's say futures.
00:22:25
Speaker
You get 10 is to 1 leverage from the exchange and you can basically buy 10 lakh worth of Nifty and sell with just 1 lakh of margin but if you're buying 10 lakh worth of Nifty, you have to sell that as well. So for that 1 lakh rupee, you're doing a transaction of 20 lakh rupees.
00:22:43
Speaker
Now, let's say you are a day trader and you trade just once a day. You go and you buy Nifty and you sell Nifty and that's your trade for the day. You don't do any more trades, but you do it once every single day for one full year. You only have one lakh rupees in your account. You have transacted 20 lakh rupees multiplied by 252 or even if you do 250, you've transacted five karuk.
00:23:10
Speaker
So with just one lakh rupees, you've transacted five crore. And if you look at the commission that you pay on it, based on my mathematics, and there are different formulas for flat fee versus percentage commissions, things like that, it comes out to be about 20% on an average than I did the math back then.
00:23:30
Speaker
I know for a fact because I've worked with the largest hedge funds in the world and the biggest money managers in the world who are known as the phenomena and the gurus of walls free and they have not made 20% a year consistently.
00:23:45
Speaker
Warren Buffet made 21% a year consistently. He started investing when he was 11 years old. Today he's almost 85. He made 20% a year in that time frame and he is the richest or at one point he was the third richest man in the world. He still is worth 60, 70, 80 billion dollars today by just making 20% a year.
00:24:08
Speaker
and you are taking that 20% in commissions away from traders and you hope that they will make money, knowing that they are not war and buffet, it's not going to happen. As a result, we see more and more people come and complain, stock market is a gamble house. We lose money over there. You go and invest just because you're going to lose money. It's a video game. You know, I hear all of these phrases and deep down right now, capital exclusion is must. I have not seen anyone becoming wealthy unless he's made investments.
00:24:39
Speaker
And you cannot make investments in just properties or houses around where you live. You cannot just make investment in buying gold. Or you cannot just make investment putting money in a fixed deposit. Most of them are known except in property. Both gold and fixed deposits are known not to or barely be in question.
00:24:58
Speaker
in the long term, you don't become wealthy. And on one side, you are not putting your money to the right usage. And we know more and more, the wealthy people in the world are wealthier because they are investing their money. And that is the source of them growing their wealth. At the same time, if you are an entrepreneur, if you're a businessman and you go to, you know, you build some business, you want to raise external capital, one of the ways to raise external capital is, you know,
00:25:29
Speaker
Eventually, everyone wants an exit, so you have to go to that IPO route at some point, be able to become a public enterprise, and that is everyone's goal. But would that goal even exist if there was no capital market?
Finvasia's Business Model and Services
00:25:42
Speaker
If there is not a liquid enough market, if there's no financial inclusion, the liquidity will drop in the equity market.
00:25:48
Speaker
If liquidity drops in the equity market, it impacts companies and entrepreneurs who want to eventually go public, because at some point they have to raise money and they have to cash out on what they've done for their lifetime. But if there's not a liquid market out there, if there's not, because of lack of financial inclusion, that dream also does not come true. So the whole economic cycle goes per class. If you do not
00:26:13
Speaker
bring financial inclusion, we do not bring more liquid capital markets, and we don't reduce and remove frictions from the capital market. So like the Robinhood model, Robinhood is I think beyond zero profits, they don't sell anything at all. So their model is payment for an order flow. Is your model similar to that? And for people who don't understand, what is payment for order flow? Payment for order flow is not allowed in India because there's no OTC market in India.
00:26:41
Speaker
And I personally do not believe in payment for order flow. I used to buy order flows when I was at Wall Street and I know that institutional traders are at an advantage when they pay for order flow. There are different ways to look at payment for order flow. So if you look at it, when your order is going, your order is going to an exchange or a specific trading venue.
00:27:03
Speaker
which we call a multilateral trading facility, or a unilateral trading facility, which can also be a dark pool and that becomes more and more technical as you go more into it. But in a very simplistic term, if I have to say it, I'm a hedge fund. I want to buy the stock of Apple and I want to buy 100 million shares of Apple.
00:27:24
Speaker
Uh, and, uh, I rather, uh, you know, uh, so when a retail guy is going to the exchange and he's going and hitting the bid and the offer over there, uh, you know, he, uh, uh, basically he gets what is the price that is there at the offer. The hedge fund comes and say, we will keep on giving you the price at the offer. You just hit my.
00:27:47
Speaker
So let's say the retail guy is selling Apple and the hedge fund wants to buy Apple. So what's happening is the hedge fund is getting filled at the bid price while the retail guy is getting the lower price. So in a way, puts them at a disadvantage and gives hedge fund an advantage to be able to get that order and fill their market making books if you have to put it like that.
00:28:12
Speaker
But that's not a model that's allowed in India and we do not do any payments for overflow in India whatsoever. And that is where we go through audits every year.
00:28:26
Speaker
and because right now we are among the top 15 volume generators for the exchange, we come in what is called enhanced supervision, which means that regulators are more concerned about brokers like Shunya who are too big to fill in their terminology and they have to go through reporting
00:28:50
Speaker
a much more diligent reporting process, which also is intraday reporting at multiple times based on, you know, the positions and the equity and how much money we have to put in the exchange, things so and so forth. If you look at Indonesia as a larger picture, we are into financial services, we are into healthcare, we are into real estate, we are into technology, we are into blockchain.
00:29:18
Speaker
All of these businesses that we built were built around the same intention to do something that basically will be disruptive, bring engineering into the traditional businesses, and re-engineer the whole process. When we got into healthcare, and now we have multiple products that we're working with in healthcare, which is for diabetes reversal, for example.
00:29:43
Speaker
There's a lot of research that happened towards the average is reversal. They're implementing real time as it comes out. Please finish your part. And Shunya is just one of the 10 other products that Sangeesha has with the exact same intention. Let's disrupt the markets that we go in. Let's solve a purpose. Let's create an ecosystem that will be forward-looking and that challenges the status quo of how the markets operate and behave right now.
00:30:10
Speaker
One of the biggest challenges we had at Indonesia was, how do you hire people who are not trained to work a certain way? For example, how do you hire a salesperson to go and do sales for Shunya if there's no commission involved? And we had to hire people fresh and train them and tell them there's nothing to commission. You get paid salary for a reason and you get paid performance bonuses for performances. Don't think about commissions.
00:30:40
Speaker
OK, cool. Cool. So first, let's wrap up what we were talking about last time. The question I was bestering you with is how does the zero brokerage make money for you? Basically, I believe brokerage is an unnecessary ego to anyone who wants to manage his money. So you were saying people who became billionaires just compounding at 20 percent a year. You know, so if you look at just the history of it, you know,
00:31:10
Speaker
If you go back into the history, brokerage was an ancillary business. In Western banks, they came out with this whole idea of IPOs and things like that. And then once the IPO started happening, and then there was secondary offerings, they had to somehow bring it to the masses, to the retail consumer. And that is how brokerage became a necessary service that they had to give.
00:31:33
Speaker
And then the exchanges came together and all of those things happened, things evolved. But it was never a business, per se, up until very recently. When I say recently, I mean late 1980s is when we saw that coming up as a business.
00:31:52
Speaker
And there was a time when a broker was such a large business that people, you know, started looking at brokerage as a complete business of its own, by and large. And this goes back to, you know, all the different movies that you would see from Hollywood where brokers on the phone tried to sell people stocks and they, you know, are making money from that. Fast forward to, let's say, 2000 after we had the dot-com Babylon bust.
00:32:19
Speaker
People realized that they were paying a lot in brokerage and early 2000, 2001, 2002 is when flat fee brokers started coming into existence. You know, talk about E-Trade, you know, Child Schwab or Questrade or all of these guys that came into existence back then. And then maybe not Child Schwab, but E-Trade and those kind of guys.
00:32:42
Speaker
And they change the whole brokerage business to say it's a flat fee business. You pay us $7 a trade or $5 a trade or $2 a trade and we don't care what the size of the trade is.
00:32:54
Speaker
And then, you know, you fast forward a little bit more than there were people like Robin Hood who came out who said, zero commissions, zero, you know, you don't pay any commission, but you still pay clearing fees and you still pay administrative fees. And we would make money from your flow by giving the flow to dark pools and things like that. Fast forward to 2015, Vinisha came in and said, well, guys, let's not do it in peace. You know, if you want to go zero, just go zero.
00:33:22
Speaker
Zero means zero. I have a question. The cost of a brokerage is all fixed. Like irrespective of how many trades you execute, your costs are fixed. Like you have probably like a fixed fees that you give to the exchange and it doesn't depend on how many trades.
00:33:40
Speaker
It does not depend. I mean, the only thing that is basically is, okay, if you go from 1 million messages to 100 million messages, you might want to put two more servers over there. It's not that the exchange is going to come and charge you more because you're transacting more. And it's not that exchange charges anything to begin with.
00:33:59
Speaker
Okay, the cost is only the technology infrastructure which has like a step change function rather than every additional trade being executed costing you some few pennies. That's not the case here.
00:34:14
Speaker
So, which means at scale, it doesn't cost much and which is probably why a company like Zeroda is bootstrap profitable because they risk scale and the cost would probably not be so high allowing them to become a profitable bootstrap business. If you look at any of the listed brokers in the world, you would realize that their average profit margins, net profit margins are extremely high. They range between 30% to 70%.
00:34:45
Speaker
And that's for the same reason. As you scale up, there's no cost. Okay. So you still need to give the listeners some answer on how you make money. You're not a charity. You already said that. You don't want people to assume the worst, right? It's better to give people some idea of how you make money.
00:35:10
Speaker
There are benefits that we get from the exchange when there is a lot of volume. Exchange does make money and exchange does pay broker a part of those profits in terms of rebates that come to the broker. Those rebates are very small at a very small level when your volumes are dull.
00:35:28
Speaker
Right now, if I go by the right account that I have from my business intelligence guys, we are among the top 15 volume producing brokers for the exchange. Volumes are fairly large and whatever rebates we are getting is way more than enough for us to cover the cost and make
00:35:52
Speaker
you know, money on top of it. And then it's not just a brokerage. You know, Phin Asia is a house of brands. There are multiple brands that we have. We have more than 10 brands across the world. We do plan to bring some of them to India. The more people trust us, use our platform, the more they will be willing to trust other services that we bring into India.
00:36:12
Speaker
So we don't have to necessarily charge people for something that we don't have a cost. We'd rather prove ourselves. And I think we've done fairly well since we launched Zero Commission in India. We've seen a lot of, I would say,
00:36:32
Speaker
We've heard good things that people have said. Not everybody says good, but to a large extent, we hear that and we believe that we are building that trust in people, saying that at the end of the day, Phoenicia is an ethical, engineering-driven business, built by engineers. And the goal is to be seen like that and to be delivering on that promise. And as long as we do...
00:37:00
Speaker
business model. What you're giving for free is your top of the funnel. Some of those people will get converted into becoming paying customers of products which give you better margin. Here also you're not exactly making loss on what you're giving for free. It's a good top of the funnel. It's a good top of the funnel. You can think of it like that. It's still not that we are losing money by doing something like this.
00:37:30
Speaker
What are the other products? You said you have like 10 other product categories? Within financial services. So we do have products in financial services, in healthcare, in technology, and in real estate.
00:37:46
Speaker
So within, let's say, financial services. So we do have a brokerage business in India. We do have a brokerage business internationally. We have a license in Europe, a license in Africa, a license in Mauritius. We are in the process of getting our Australian license, your license in Japan.
00:38:10
Speaker
So these are the ones that Australia is in the making. That's for the brokerage. Apart from that, we also own the largest social network in the world for traders, which is called ZuluTrade.
00:38:25
Speaker
It's a social trading network where people can come in and they can see real-time trades of successful traders. We rank them, we have tens of thousands of traders on it, and then people can follow the trades real-time. Let's say if I believe that Akshay is a good trader, I can see your trades real-time, I will see your trades, and they will get copied on my portfolio real-time.
00:38:51
Speaker
We've translated about $2.5 trillion worth of coastal transaction volume on it. Since inception, we've serviced about 2.5 million traders across almost 150 countries from it. You don't have to be a client of Indonesia. You could be a client of any broker in the world and still use our service.
00:39:10
Speaker
So it's a broker agnostic platform in that respect. And it's also a platform agnostic. We support multiple platforms that people can use, you know, on ZuluTrade. Like you would have built integrations with a Zerotha and Appstocks and all of these where people's trades are, the data is flowing to ZuluTrade so that it gets real time updated.
00:39:36
Speaker
Yes, the data flows into ZuluTrade and gets real-time updated. Basically, we charge brokers of fees for being on the platform. When the nation initially acquired ZuluTrade, ZuluTrade was founded in 2007 in the US. When we acquired it, it was still charging people commission. There was a commission of a 1.2 peps trade in the Indian term. That's about 1,200 rupees per kilo.
00:40:07
Speaker
this year we made it zero cost. So now Zulu people can use Zulu trade without paying sort of commission on top of it. Then we also have a portfolios.com. The reason for a broker to pay you is because it encourages more trades. Like if a customer of a broker is on Zulu trade, he would be
00:40:33
Speaker
probably trading more because he would be looking at what other people are trading and copying some of those trades and engagement. Repention is more. I would not say they would be trading more. People would be longer with the broker because the client is not losing money. As for the audited stats that we have for ZuluTrade, more than 70% of our traders on ZuluTrade make money if they are not manually trading.
00:40:59
Speaker
If they're just doing uninterrupted copy trading on Zoom trade, year over year, we see more than 70% people making money. And the people whose trades they are copying, what's in it for them? Why would they share their trading strategy? They do get paid for it. They get paid for it. Okay. Interesting. Okay.
Technological Solutions and Neo-Banking
00:41:20
Speaker
You were talking about the next product.
00:41:22
Speaker
We have portfolios.com, which is a community-driven website, mostly for people to share ideas and knowledge with each other, have access to trading tools and risk management tools, have access to real-time charts that we create automatically based on things like that. It's more like a knowledge-based and an education-based community platform that we own.
00:41:50
Speaker
And then we have also an acquisition. No, this was built-in rules. And this is like a subscription product? Right now it's free.
00:42:02
Speaker
But eventually you would have like some part three, some part eight, like a premium. It's hard to say how we would monetize it. I think the first thing is because we understand technology so well and we have so much technology already, it's easy for us to give it up for free. In future, how they all come together would depend upon the basic premises that we have. Don't charge if you don't have to and keep your product ethical.
00:42:28
Speaker
As long as those things are met, we will do that. Since we're talking about Finance and Pintech, we also have a brand that we're launching now. It's called 1Vault. It's a brand that's in the banking division.
00:42:50
Speaker
It's a more banking product. We will be giving people eye bands, multi-currency accounts, debit cards, credit cards, and a single source of like a single vault, which is a secure way to invest in anything and do anything with your money, whether it's investing, spending, saving, lending, all of that is within that single app. And that is, we are hoping our licenses to be approved by the end of this year.
00:43:21
Speaker
And we would be, let's say, we are hoping that before the end of this year, in fourth quarter, we would be launching this product. And then, you know, basically tap into it. How is it different from ICICI bank app? On my ICICI bank app, I can do everything. I can invest, like, pay my bills, I can buy an event ticket, I can save.
00:43:47
Speaker
I have multiple things to say around that. If I have to pick one by one, ICIC is an amazing bank. They've done amazing, but still a traditional bank. There were brokers before Shunya came to India and those brokers are still there. Not that they've lost their business, but they needed a change. Would you like to have some changes in your ICIC bank?
00:44:18
Speaker
I guess I'm engaged enough to have strong opinions of it. I mean, for me, it's there. It does what it says that you do, but it charges you money for everything that you do. And not just that, the typical example that I give to people is when you go to a bank, you open an account, it's almost like you're going to
00:44:46
Speaker
a friend who's gone roll. So let's take an example. You go to one of your very good friend, you tell him, well, I'm going for a vacation for one month. Can I keep my car in your garage? Because I don't know. I don't feel safer at my home. Like, oh, no problem. You can leave your car in the garage. As soon as you go take the flight, he hits your car to his girlfriend and say, you can use it. No problem.
00:45:09
Speaker
You talk about the fact that money you deposit in the bank is essentially lent out. A bank is a way for connecting savings of people and lending it out. Yes, it is important to have the credit available in any economy for the economy to grow. And that's hands down the most important thing.
00:45:32
Speaker
But then at the same time when the risk of default starts hitting, who pays for the default? It's the tax bill that pays for it. So practically if his girlfriend crashed the car, you will come and pay for your car to fix it. So the whole cycle is not really a complete loop cycle.
00:45:53
Speaker
And if the risk is anything borne by the taxpayers, then why is the benefit not given to the taxpayers or not to the depositors who deposited the money to begin with? That mismatch is very large. And I believe that we will try to see if we can do something about that. So you're saying as a depositor, I will earn the best 45% of my money.
00:46:19
Speaker
Whereas the bank is lending that money out at 60 to 20% or so. And again, depending on the year, between 20 to 20%, depending on whom they are lending it out to. So there's a big spread over there, which the bank is
00:46:34
Speaker
So in a way, it's wasteful. There should be a way for me to directly lend out money. To directly participate in that and not just that. I think even the demand of a user has changed. What they want from a bank is not just to be able to give you a bank account.
00:46:52
Speaker
You want to be able to go into your bank account and then not go from one entity to another entity. You put money to this entity, then you can start trading, then you move money over here, then you can send it to your relative, then you move it over here, then you can use a debit card. It has to be seamless integrated single platform to do everything that you want to do with your money.
00:47:18
Speaker
So, this bank is for Europe, right? We will be launching digital banking services in India as well very soon. It's in the pipeline. What licenses do you need to launch a digital bank in India?
00:47:35
Speaker
What do you like? Not a Distal Bank. Let's say a NIO Bank, if you have to say, you need to have an NBFC license, you need to have Broker's licenses, you need to have Nickery licenses from international brokerages if you want to create those things. You need to maybe have 82 relationships in place to be able to assist with remittances and things like that.
00:48:03
Speaker
And so there are a few licenses that sort of add up into it. And what are you launching? What will the product promise speak? Like what will you market it as? It's still in the works. I think the most I can develop is that we are looking at banking into India right now, as well as into the international markets. But hopefully you will see things coming out soon in India as well.
00:48:34
Speaker
Because the licensing norms are easier. I guess Europe is pretty much... Not easy.
00:48:39
Speaker
I don't think it's easier by any... It's definitely... In general, it takes longer to get licenses and approvals in India, but the requirements are much more stringent as I have experienced in Europe than in India from a capital and a technology standpoint. They want to do an audit of every single thing about your technology, about the money that you have,
00:49:05
Speaker
your business plans, who are the directors. It's fairly exhausted that could take many years. This application is about three and a half years old that is now coming to completion.
00:49:20
Speaker
But I mean, Europe has a clear path to getting that kind of a universal banking license. I mean, in India, even that path is not clear. I mean, there is too much uncertainty, right? Like being able to actually create and, like, say, revolution. I guess what a proper neo-bank should look like. I don't think India has a proper neo-bank because of regulatory constraints.
00:49:52
Speaker
Yes. When you say Revolut, there are multiple parals as well to it. India does have some limitations per se because of the capital controls that India has and other regulations it has. But I believe every country has their own peculiarity.
Blockchain and Digital Currency Insights
00:50:12
Speaker
Europe has some other inhibitions that the US might not have.
00:50:19
Speaker
there are those idiosyncraticities and peculiarities of every market, I would say.
00:50:29
Speaker
So, what else is in the portfolio of Finix? We also own one of the oldest Finix in the world called Activision. It was again an acquisition that we did. This is a company that builds technology for hedge funds and brokers and financial services company.
00:50:50
Speaker
We provide technology to some of the listed companies across the world and unlisted companies as well, and some of the largest as well. And as a matter of fact, one of the largest brokers of the US was completely built on our technology.
00:51:05
Speaker
at Actrader. So that's our first mobile application that we built at Actrader was in the year 2002 when people were still using GPRs. So it's fairly old. We transacted about 400 trillion or the total volume that has been transacted on our platform over these last 20 years is about 400 trillion. Every month we do a few trillion in terms of transaction volume on the platform.
00:51:35
Speaker
So that's another one of our technology offering that we per se have.
00:51:51
Speaker
This would be competing more with Fidesa and those kind of platforms. Bloomberg has a much more comprehensive communication channel and database channel. You have a lot of data on it, you have a lot of calculators on it, you have its own social network of Bloomberg where professionals talk to professionals.
00:52:20
Speaker
But their biggest value was the data that they brought together, not the trading application. Trading application at Bloomberg has started much, much later. I first used a trading application on Bloomberg. I believe in the year 2005 or 2006 was the first that I used Bloomberg's fix engine to be transacting on the exchange.
00:52:47
Speaker
We also have a strategic partnership. There's not like a wide-labeled solution. There's more like you log in and you trade on it. The way retail users would be using retail apps like Charles Schwab's, H1s. Yeah, they would be using it. It's not a wide-label. It's our technology that people can then resell them as a wide-label. But the technology is built in owned by us.
00:53:18
Speaker
What else is in the portfolio? We have a strategic partnership with the digital asset payment service provider that is licensed by Austrac in Australia. We are in the process of getting a European license as well for it. It basically helps people to accept payments on their websites or their mobile application.
00:53:45
Speaker
payments and also had the payments converted from PR to crypto PR in that respect. But purely a B2B service offering, which is licensed by Ostrac under Ostrac regulation in that respect.
00:54:04
Speaker
This is like a payment gateway that can accept crypto. It's basically a payment service provider that extends. It's a payment service provider. So let's say for example, if you have a Shopify application or if you have a website on Shopify,
00:54:26
Speaker
And, you know, you want to accept payments on your website, you would go to maybe, you know, you would go to Skrill or Neteller or Stripe, or you would use WooCommerce. Instead of that, you can also use Capital Wallet. So, you know, on those lines, but the beauty of that is it allows you to also accept digital currencies as a mode of payment.
00:54:52
Speaker
I guess there was a time for this business to be interesting, but I guess right now is not the time. I don't see that. I think it's not about digital currency. I think it's about blockchain. There are problems that blockchain has solved with any technology. If you look at what happened in 1987, what happened in 1999, what happened in 2007,
00:55:16
Speaker
whenever there is this breed that piles up unnecessarily over any innovation whether that is innovation in collateralizing debt obligations or innovation in IT or WWW innovations of 1999 or financial services innovation of 1987 but too many people jumped on it they did form a short term crash to it but in the long term each of those industries are
Healthcare and Technology Initiatives
00:55:48
Speaker
tons of times better than what they were in 2007 or 1989 or 1987. So, I do hear those things, but I believe that at the end of the day, if there's a tech, we cannot go to the market and say, I have a technology, what can I do with it? So I'll give you an example. Somebody came to me, a very good friend of mine. He's like, Natty, you are a blockchain expert and I want to build something in logistics of blockchain. Can you tell me what can I do?
00:56:19
Speaker
You don't take a technology and see what can I build on it. You look at a problem and say what technology can solve that problem. Not every problem can be solved by blockchain. And that is the euphoria or the irrational exuberance that has come again and again in the world. And it's part and parcel of capital markets evolution.
00:56:44
Speaker
I mean, blockchain, the technology, I'm with you. It has a use case. Digital currency is what I'm not convinced that there is a use case. Then why do you think we are launching digital currency in India? Why is government launching a digital currency in India? Okay.
00:57:05
Speaker
Although it's not decentralized finance. Traditionally, digital currencies are supposed to have a decentralized finance angle. We don't know yet.
00:57:19
Speaker
All we know is that I've seen the paper from European regulators about the discrepancy that's coming in Europe. When you say it's decentralized, what is the definition and what is the benchmark for decentralizing? Is the benchmark that the money is not controlled and owned by central bank? Then where is the private system coming from?
00:57:43
Speaker
If the benchmark is that your money is not held by so let's say for example you're holding an app in your hand and you say I have a million dollars in this app but that million dollars is just a database number on the other hand if you're holding a million dollars of digital currency in your hand it's in your hand
00:58:02
Speaker
So what is the level of decentralizing that you're talking about? At the end of the day, there is a value of central banks. I don't believe that disintermediating central banks is the right thing to do because then there'll be no current system. Got it. Interesting. And what else is in the portfolio?
00:58:22
Speaker
Within healthcare, we have multiple products that we are working on or that we have launched. One is a product that basically does analysis on your DNA, projects what potential diseases you could have in future, and then create preventive supplements customized to each person.
00:58:42
Speaker
The other one is basically working on diabetes reversal. We have, based on the patients that we have seen so far, we have a physical facility in India. You're also in the process of having a physical facility in Canada.
00:59:01
Speaker
And we have the University of Victoria doing a research paper with us on this. And how can we put diabetes into remission? In simple terms, how can you
00:59:19
Speaker
If you have diabetes, can we control your diabetes without giving you any medication? Or can we get you off of the medication of diabetes and your sugar levels will still be in control? What we have seen is, we've seen a very, very large percentage of people having improved glycemic control of their body. We've seen an overwhelmingly large number of people who have gotten off of medication dependence.
00:59:49
Speaker
My mother is one of the biggest examples. She's been a diabetic for the last 40 years almost. And that is why I have a personal touch towards this disease. And she has not taken any insulin injection for the last two years now. And she's doing perfectly fine. So that's what we're working on. So this is what the jargon for this is digital therapeutics, right? Like the product that you're putting there.
01:00:16
Speaker
Uh, not digital. What would be, what would be your definition of digital therapeutics? Like you said, all these words, neo banks, they are very, very abused. Uh, you know, what is really digital therapy as for you? No, I mean, there's this company called breathe wellbeing. Uh, then there's this freedom from diabetes, which incidentally, my mother's subscribed to that and it helped her quite a bit. Um,
01:00:43
Speaker
Yes, I believe they are doing good stuff and they are helping people in their lives, which I'm happy about because for both me and my brother, health care is a very emotional topic and we do not look at that as a business. So I do believe that the more people get onto it, the better it is for the world in general.
01:01:09
Speaker
So we hired Head of Endocrinology at PGI Chandigarh, which is one of the most premier institutes of Asia. The Head of Endocrinology is part of this whole program that we are building. We've hired one of the very few pediatric endocrinologists of India. I think they're just a hand-blocked pediatric endocrinologist of India. One of them works so with us.
01:01:37
Speaker
And then we've partnered with the multiple universities because we wanted to be evidence-based and we want to be continuous here and we wanted to be based on facts and not saying that you go zero-carb and your sugar levels will drop. It's not the right thing to do. And then... What are you branding this as? What's it called? This is called Gini Health.
01:02:07
Speaker
Okay. And it's available in India also. It's available in India also. What's the pricing?
01:02:14
Speaker
I mean, Gini Health, we do a lot of other things. To answer your question, the pricing is between $1,000 to $5,000. And you know, $1,000 is where a person comes in physically to our facility because we do a physical and medical facility. And the person comes in and we take his blood samples. Our labs are inbuilt within the facility. So in that half hour that you're waiting for the doctor, all of your blood samples and results reaches a doctor.
01:02:42
Speaker
And then you go through Fundoscopy, you go through Neuropathy, all of those tests at the facility itself. And then you meet one of the senior endocrinologists, like I said, Dr. Mansali, who is the head of Endocrinology at PGI. All of this combined is I think only 1200 rupees. And then if you get on that quarterly programs that have been built, I think they are about 5000 rupees.
01:03:07
Speaker
And these programs will be like app-based measures to drive behavior change? It's only one of the things because you can never be digital. The problem that I have seen is people say, I start using your app and what if my doctor does not get paid a commission and he's going to get upset about it. Those things are very prevalent in India.
01:03:34
Speaker
Unfortunately, it is the way the bureau practices are built. We combine both physical and digital together because there is no digital only model that can completely do a comprehensive support.
01:03:55
Speaker
to someone's needs. So it has to be a hybrid model where you have a physical doctor and you have digital support with it. Like you would have a doctor on payroll for people to get their concerns and advice and stuff like that. Yeah, multiple doctors and payrolls and
01:04:19
Speaker
It's a physical facility. You would go to any other physical medical facility. And then we also recently did incubate a company with IIT, the Indian Institute of Technology.
01:04:37
Speaker
here at Roper. We want to build products which we have been experimenting already. We've been researching it for the last two years. People come and tell me that, you know, we are going to do this.
01:04:58
Speaker
And I hate to say that I have heard about black boxes in finance world so much, but fact of the matter is our body is the biggest black box. And we want to do our best to change that. We don't want people to come and say,
01:05:15
Speaker
we didn't come to know it happened. And we are trying to build nano and micro devices that would go inside the body, track the body real-time. And maybe some non-invasive devices that would be basically looking at other bodily fluids to real-time detect and identify diseases. So that's what we are working on with body, which is the one that's in Qubit, IIT.
01:05:45
Speaker
within IITs and partnership with IITs. This is called biohacking, right? When you're collecting data, you've got to...
01:05:54
Speaker
No. Unfortunately, biohacking is where you're hacking your body's mechanism to work. Biohacking is more like, let's say, for example, you start eating metformin because metformin is norm to increase longevity in a person. And people start eating metformin just because it's time to start eating metformin. That's biohacking.
01:06:19
Speaker
Then you basically get an electrode. Let's take an example. Let's say there are electrodes that you can put in the brain that will help with the motor imbalances that a person has. Will that be considered biohacking or will that be considered curing a disease?
01:06:40
Speaker
Biohacking is where you are proactively taking a measure to induce certain substance into your body to alter the known behavior of the body. But here we are not trying to alter anything. I think typically biohacking is a conflict with data collection. Data collection is a big part of that move.
01:07:07
Speaker
Data collection is part of analytics that they need. But data collection is for everything. Even if you go to a hospital, if you go and see any doctor at any point, you can always ask him, what does your protocol say?
01:07:22
Speaker
That means is what is a predefined medical protocol for the certain disease that you're solving the problem for. And that protocol is based on the data that has been collected. So everything is based on data collection. But I think data collection, data is data. What you make out of it is the product. And in that respect, collecting data is simply just collecting data. It is not anything else.
01:07:52
Speaker
How will you convert data into products? So you told me you're building devices to collect more data, get it real time. It's real time data. So for example, today my mother does not have to prick her finger to see what her sugar levels are. She scans herself with a mobile phone.
01:08:09
Speaker
You know, and tomorrow I want people to scan, you know, their arm with a mobile phone to see what their lipid profiles are, to see if there are any cancer cells that have been induced in the body to see any of those problems that we see that come with aging. So that is monitoring it.
01:08:30
Speaker
Got it. Okay. And you would have some way to run algorithms on this data and then give some recommendations or make predictions and stuff like that. That would go in the clinical side of those tools. This is more a biomedical engineering.
01:08:47
Speaker
And so the job of this is to identify and alert when things, you know, for all of these biomarkers that are in your body, what happens clinically is then in the hands of the clinicians at that point. Got it. Okay. You said you had some ventures in real estate also.
01:09:13
Speaker
Yes, we do have multiple ventures. It's a business my father started, we inherited. We do have a portfolio of commercial, residential and retail real estate, built primarily around premium segments. What's the net worth of the group as a whole? We are still a private company.
01:09:38
Speaker
You would probably have in your portfolio different businesses at different stages. There would be some cash flows which are throwing up enough cash to help you invest in the new experiments and bets that you're taking. So what are the cash flows for you?
01:09:54
Speaker
We have been more lucky in respect that we have mostly bootstrapped and everything is basically a bit positive. So each of the businesses that I mentioned to you right now, they're all a bit positive and they have been a bit positive within the first or the second year of us doing that business. Like if you were to make a pie chart of revenue contribution from all these various products and businesses, what would be like the top two or three contributors?
01:10:21
Speaker
Financial services and real estate that both are very good. Healthcare, like I said before, we don't look at that as a business. We look at it as something that's close to us. So it would be very, very low in profit contributions. What's the way in which you manage such a diverse set of businesses? Traditional wisdom says that one should focus
01:10:50
Speaker
you know, not do so many different things. You're going against traditional wisdom here. Do you have any insights to share in terms of how you managed to pull it up? I would love to hear that. Yes, I had been. I was advised earlier in my career by multiple people, focus on one thing if you want to make it big, including some VCs I spoke to at some point as well, probably 10 years ago.
01:11:21
Speaker
And we keep getting VCs contacting us every 15 days or so. Or maybe every week sometimes we get email. My answer to them was that, guys, first of all, we're not building these businesses to sell. So it's not about, you know, I build something that becomes valuable and then I find for next year, I'm building these businesses with my brother and with my family, because we strongly believe that we want to do this.
01:11:46
Speaker
That's number one. Number two, it is never a one-man show. It is not me or my brother or my father, you know, who's running these businesses. It's been run by a very, very diverse set of people from across the world who have been very successful, you know, in running those businesses with different companies. And they agreed to come together, work for Filmasia. And that I believe is our biggest strength. For example, you know,
01:12:17
Speaker
different ones. Every business has its own management. So when you ask me, what is the price that you are selling these diversities reversal for? I said, I think it is about this because I do not know exactly it is 6,250. It has its own CEO. Every business has their own respective, you know, we don't call them CEOs, we call them managing directors. They have their own respective managing directors and directors and teams.
01:12:43
Speaker
And where we step in as we grow is more to make sure that strategically the products and the businesses are going in the direction of what we stand for, what we believe in. It has to be technology driven, it has to be transparent, it has to be solving a problem, it has to be looking at making money because of volume, not making money because we can charge this money.
Managing a Diverse Portfolio and Advice for Entrepreneurs
01:13:08
Speaker
Those kind of things come into it. Amazing.
01:13:11
Speaker
What advice do you have to young entrepreneurs, aspiring founders in terms of how to build, how to scale?
01:13:22
Speaker
I think would be very common that everyone says, but something that I just said is don't go out and build a business because you want to make money. Making money is very important. It is a barometer of success that you have achieved in your life. But the fact of the matter is that you don't look at a business and see how much money can you make from it. You look at the business and see, is there a problem that I can solve with it? If you're solving a problem, you will get paid for it and you will make it.
01:13:53
Speaker
So focus on solving a problem, focus on identifying what problem can be, how you can solve problem for the most number of people that you can serve to around you and the success will be a byproduct of that.
01:14:08
Speaker
And then don't look at technology and say what I can build from it. Look at the problem and see what technology you can use for it to solve those problems. Those are important things to look at when you're trying to build a business and you're trying to make it large.
01:14:26
Speaker
As an organization, your DNA was B2B because you started managing money for H1 speeds for the century like a B2B kind of a business, which there is a hangover of that even today in the sense that you don't spend much on customer acquisition.
01:14:46
Speaker
Do you think that needs to change because as you're becoming more B2C, that spend on customer acquisition is like, you know, it's par for the course in B2C businesses. If you want to scale them up, you have to spend on customer acquisition.
01:15:04
Speaker
It depends upon the speed at which you want to acquire customers at different phases of business. So far, we have been getting a lot of word of mouth customer acquisition. But needless to say, even Coke and MasterCard still spends on marketing.
01:15:25
Speaker
and we will have to spend on marketing and for that reason I believe every business in some way or the other specs on marketing so we will we will have to be at some point and it's just that
01:15:43
Speaker
we have not been as aggressive as we should have been. And that basically comes from the fact that we have been a buy side business for the most of the time, not a sell side business. And as we stepped in the sell side, maybe just five, seven years ago, we are learning that we will have to look at convincing the customer as well at some point. What's the difference here between being a buy side business and being the sell side business?
01:16:11
Speaker
So buy side business is basically, so let's say a hedge fund is a buy side business, because hedge fund is not selling anything. It's on the buy side. We are a buy side of finance, not on the sell. Tell side of finance is more like brokerage, insurance, you know, and buy side of finance is more like wealth management, hedge funds and those kind of things.
01:16:31
Speaker
And that is where when you're on the buy side, you don't do any marketing. It's always the other way around. So that does impact the way we think to some extent. But then I think we will have to add up. We just don't want to be shamelessly marketing to acquire the customers just based on marketing. And then marketing becomes a drug that you can never get off of. There has to be substance in the product that has to match the marketing.
01:17:01
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about
Listener Engagement and Feedback
01:17:09
Speaker
it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at ad at the podium dot in that's ad at T H E P O D I U M dot in.