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A Deep Dive into India's Payments Ecosystem | Byas Nambisan (Ezetap)
394 Plays2 years ago
"In a startup, sometimes the most pragmatic decision is also the hardest."
This was the reality Byas Nambisan faced when he decided to shut down Ezetap's in-house hardware manufacturing. While the hardware was a source of pride and emotional attachment for the company, he made the dispassionate call that it "stopped making economic sense," a tough decision that ultimately stabilized the business and paved the way for future growth.
From spending nearly two decades at a corporate giant like Intel to taking the helm of a disruptive startup, Byas Nambisan's journey is a masterclass in leadership and adaptation. As CEO, he steered Ezetap through a critical post-founder transition, grew it to process over $10 billion in annual transaction volume, and orchestrated its successful acquisition by Razorpay in a deal valued at up to $200 million. Today, he serves as an Independent Director for Avalon Technologies Limited.
In this conversation with host Akshay Datt, Byas Nambisan breaks down his incredible journey.
Key Insights from the Conversation:
- Corporate Discipline in a Startup: Byas successfully translated the process-driven discipline from his 20-year career at Intel to instill financial rigor and operational excellence at Ezetap.
- The "Intel Inside" Model for Payments: Ezetap's core strategy was to become an indispensable software partner by embedding its payment SDK deep into enterprise clients' workflows, creating high switching costs.
- Post-Founder Success: The episode provides a blueprint for navigating a company after founders depart, emphasizing continuity, stakeholder trust, and disciplined execution over radical, disruptive change.
- The Omnichannel Thesis: The acquisition by Razorpay was driven by the clear vision that the future of commerce is omnichannel, requiring a single, unified platform for both online and offline transactions.
Chapters:
[00:00] - From a "Lifetime Intel Employee" to a Startup CFO
[06:24] - The First Big Pivot: Re-engineering for Chip & PIN
[09:12] - The Core Thesis: Why Software Was More Important Than Hardware
[13:43] - The Go-to-Market Strategy: Banking Partnerships vs. Direct Sales
[18:52] - Why Ezetap Chose a SaaS Model Over Transaction Fees (MDR)
[24:15] - The "Co-Pilot to Captain" Transition: Taking Over as CEO
[29:28] - How the Mindset Shifts: From a CFO's Lens to a CEO's Vision
[35:46] - The Road to Acquisition: Why We Decided to Merge with Razorpay
[41:18] - The Omnichannel Vision: Merging Online & Offline Payments
[48:03] - Life Outside Startups: The CEO Who Restores Vintage Cars
Hashtags:
#FounderThesis #StartupPodcast #ByasNambisan #Ezetap #Razorpay #FintechIndia #StartupIndia #LeadershipLessons #Entrepreneurship #VentureCapital #BusinessStrategy #SaaS #Payments #Omnichannel #StartupJourney #AkshayDatt
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Transcript
Introduction to EasyTap's Evolution
00:00:00
Speaker
Hi, I'm Biassana Beeson. I'm CEO of Easeytown.
00:00:16
Speaker
This episode is a fascinating peek into the evolution of the payment ecosystem in India through the lens of an early pioneer in the payment space. In this episode, your host Akshay Tath is talking with Bias Nambisen, the co-founder and CEO of EasyTap.
00:00:32
Speaker
EasyTap is one of the earliest startups in the payment space, having started more than 10 years ago and was founded by some of the biggest names in the startup ecosystem today, like Sanjay Swami, who runs Prime Venture Partners, and Abhijit Bose, who is the India head of WhatsApp.
00:00:47
Speaker
EasyTap has had a fascinating journey, having started as a payment device company before pivoting into a payment SaaS company. In this conversation, Bias talks about the journey of steering the company through turbulent times and his own learnings from the journey. EasyTap was recently acquired by Razorpay for $200 million, thereby generating handsome returns for its investors.
00:01:10
Speaker
Listen on, and if you like such insightful conversations about the evolution of startups in India, then do subscribe to the Founder Thesis Podcast on any audio streaming app.
Bias's Startup Journey
00:01:34
Speaker
And we used to keep coming back home. And during that time, Bobby and Anuja would say, hey, what are you doing in a big company? Come work for, come join us. Bobby's doing this. And in 2014, when I had finished my, finished the next stint at Intel, I said, maybe I shouldn't consider doing this. I went home.
00:01:58
Speaker
I remember March 2014, I was thinking, hey, what should I do next? At the point, I'm still thinking I'm a lifelong adult person. I'd already been that 20 years. And, and then Bobby called me. So I spoke to Bobby and he Bobby said, look, if you're interested in startups, come here. This is the hot bed. You can obviously show you my startup, but I'll introduce you to Flipkart. I know all the people here. You can talk to all of them.
00:02:25
Speaker
So I went back to my room and I told my wife Irene, I said, he said I should travel there in Cenkudal maybe in a couple of months ago. And by the way, my wife was not in India when during the four years here, she loved India. She didn't want to leave. By the time I came back to the room, she said, you know what? I booked you for a flight for this Thursday.
00:02:49
Speaker
You're like Elvin Nick said to me, to meet Bobby. So that's how I ended in Bangalore. I met with Sunday Swami who is one of the founders, Bobby and Vakta. And I liked what I saw. And I knew nothing about payments. And one quick question here. Bobby is a visit boss. I'm a visit boss, right? That's right. Who's currently heading WhatsApp in India? He's currently heading WhatsApp payments.
00:03:18
Speaker
And I met with the team. One of the things I was concerned about, it was that typically a lot of the startups are starting up by people earlier on in the career. I had already been working for 20 years and I was concerned about just a cultural fit.
EasyTap's Founding Vision and Challenges
00:03:41
Speaker
and so this it was reassuring to me that this was Bobby and his co-founder Bhakta was actually had worked with me at Intel and Sanjay so I found the cultural fit was a big part of my decision making and I found a fit there.
00:03:59
Speaker
and the environment and that was going on in India was so dynamic that motivated me. I didn't know all about it, but what I knew I was found very exciting. The Mitchell piece didn't matter to me. I was going from a big corporation to a place that was a tiny room, right?
00:04:18
Speaker
that completely didn't matter to me in fact about six months later someone asked me but hey how is this going and my response i wasn't even thinking it just blurted out i said i wish i'd done this earlier okay that's my response right i was enjoying it it was great so that's my story and and i'm still here at easy tout
00:04:42
Speaker
So one question here. So yeah, EZs have started in 2011 and you joined in 14. So from that 11 to 14 period, just give me like a history of it. What was the original idea with which the original idea was really Sanjay. Okay. Sanjay used to be in FinTech. He was CEO of mCheck.
00:05:04
Speaker
And he's a very creative guy, always has ideas, always thinking about ideas. And he had this idea and he was working on the site. So then he happened to me bought the actually, and said, I'm trying to do this. We want to do make payment acceptance easy with the little device that plugs into the phone. And Sanjay explained what he was thinking. And Bhakta told him, you're completely wrong. It won't work.
00:05:30
Speaker
the way you're saying it, but I know how I can make it work. And so what started working with Sanjay is experimenting with the little arena, a little plug-in arena. And at the same time, Sanjay also inspired by squares in the US, I guess. But this was inspired by square, like the US square had something. It was roughly the same type. Square and down it, and we were looking to do it. They were looking to do it here.
00:05:59
Speaker
At the same time, Sanjay, two other players, Bala and Sree, were also setting up an Angel Fund, called Angel Prime. Okay, which today is Prime Venture Partners?
00:06:14
Speaker
Now today it's prime venture fund and Bala was also seeding some other companies so they were looking to hire some people to run the two different ideas and they were actually interviewing Bobby for the other company. Sanjay was interviewing Bobby for the other company and now Bobby had also been in FinTech in India. He had worked in NGP before and NGP and N check used to be competitors. They knew each other and they were also neighbors.
00:06:43
Speaker
We all lived in the same neighborhood and it struck Sanjay that Bobby would be the better. Bobby would be a good fit for EZTAP versus the other company and he stole Bobby from Baja. So that's how Bobby came together with Sanjay and Sanjay, since he was going to run Angel Prime, which is our prime ventures, he said he wasn't going to be acting in the execution he'd be on the board.
00:07:12
Speaker
Sanjay had already seen one exit like his previous way to zip dial was acquired by Twitter. But at that point they had not invested in zip dial yet. EasyTap was the first company that they initiated. So in a way it's a little bit more closer to Sanjay's heart than even zip dials.
00:07:36
Speaker
That's how much started and they started working on the first version which was the magnetic guard reader in this is late 11 and got the first bombing investment in 12 but then in 13 what happened was the government changed the rules that you needed to have a pen and chip
00:07:58
Speaker
so they needed to roll. We needed to go back to the drawing board, read and sign, rebuild everything, re-architect the process because the economics changed from the symbol reader that was there to now needing a more complex device.
00:08:15
Speaker
And at the time, there wasn't an inexpensive device. At the time, they had estimated that India really needs a device that is not more than 3,000 rupees, really closer to 2,500 rupees. And nowhere in the world, even from China, could one get such a device. So we ended up designing and building our own device.
00:08:41
Speaker
And it was a little, ended up being a little bit more expensive at around 3,500, but we were pricing it at 2,500 forward pricing and thinking, okay, once we get the whole universe, we can scale it down. We'll drive down the wall.
00:08:55
Speaker
No, that was very instrumental. When I look back in really driving down the market, because once we had that device and we positioned it at between 2,500 to 3,000, others had to compete and bring drive down the prices. And then, then we saw the Chinese step up in volume on these embossed devices and the prices started coming down.
00:09:20
Speaker
Okay, what did the device look like? This was like not a standalone device, right? It would connect with your mobile phone. It needed to connect with the mobile phone. I think it was a Bluetooth connection. It had two versions. We had a Bluetooth version. So it was roughly about the YABIG. Yeah, two inches. It's just all in. Yeah, it's a very tiny calculator device. And you could connect to your phone either with the USB cable or with Bluetooth.
00:09:49
Speaker
Okay, okay. It was the early version of the device. You would have an app on the phone where you would punch in the amount that you needed to go. The app on the phone, the EasyTap app was on the phone, it talks to our server, it talks to us. And by the way, this had to be a very, it was a very secure device. I had to go through full certification. I'm still proud that we are one of the few companies in the world that actually have a fully certified device. I don't think any other Indian company has even done that.
00:10:17
Speaker
but did it ourselves, it was built and manufactured out of Bangalore.
00:10:23
Speaker
So we're very proud of what we did there. Of course, later on, once the volume started coming, the Chinese volumes, we couldn't keep up in terms of pricing and manufacturing costs. Eventually we went device agnostic and the device was always, for us, it was a means to an end. That wasn't the purpose. The purpose was the software platform and enabling that and whichever device was the right fit, we could use.
00:10:50
Speaker
What was the end?
Expanding Market Reach and Innovations
00:10:52
Speaker
The end was to make payments frictionless or make allow merchants to accept digital payments instead of cash. The thinking was when you looked at the market back then, there was digital payment acceptance, but it was typical in high-end retail. 90% of offline retail and point of service was non-card accepted, not digital payment accepted.
00:11:18
Speaker
Even Amazon and Flipkart, the delivery people went around with pieces of sheets of paper. Barbie and her team actually helped Flipkart these days. Flipkart was our first customer-backed environment in delivery space.
00:11:34
Speaker
the the
00:11:54
Speaker
You saved a lot of time and you're increasing your productivity because you can do more deliveries in the same time because you don't need to come back and do all of this. You reduce your errors, you reduce your increased customer convenience, et cetera, right? So they had to go through all that process of fine tuning and creating that solution.
00:12:15
Speaker
And so then that was in 2012. But so when I joined, Apple just started, changed over to the new Pin and Chip card. And we were the first version of the Pin and Chip card was being refined. And at the same time, we had just won this large contract with SBI. SBI had a vision of reaching out to 500,000 merchants in India with an MPOS solution.
00:12:44
Speaker
and we had won that contract and that's when I joined.
00:12:50
Speaker
I was under the assumption that most of these banks have their own feeder sheet to go out and sell devices to budgets. This is why we tried where I will take the blame, we'll take the blame. That was the process we had with all the bank partners like HDFC, etc., where they did the sales, we did the servicing.
00:13:15
Speaker
of the device. We were the MPOS device and software partner. They would actually do the sales. For a bank, this would help them acquire accounts because every merchant who takes their MPOS solution needs to open a current account. So when we have lived in this RFP process with Citibank we have followed a similar logic that
00:13:44
Speaker
They would do the selling and we would only need to do the logistics and the support. And we had priced it that way. But as we jointly found out, they actually needed us to do more selling. And then the economics didn't quite make sense for us because that was more, a lot more expensive. And we were a small company back then. It couldn't really hold that. And so we, anyway, we weren't able to get the volumes we were thinking at back then.
00:14:12
Speaker
Had it raised funds when you joined? It had already raised two rounds. We just closed the second round when I joined. How much had it raised by then? It had raised, so that's a good question. I want to say it had raised about $10-15 million dollars total between the two rounds. It was just pretty substantial for that time.
00:14:38
Speaker
Yeah, it was essential for that diamond. And then subsequent to that, about a year and a half after I joined, we had raised another 26 million, which was another big raise in 2050.
00:14:57
Speaker
What was the plan here? Was it to do like how Pine Labs does where they go and they have fetal street and they acquire margins and allow them to accept digital payments? Or was it to vary into that? We wanted to work with the bank and really need a service partner for the bank.
00:15:17
Speaker
There were two areas we were trying to address. One was we saw a launch tier of merchants who we thought would be best serviced by the banks because the banks have immense reach and we could be their technology platform and allow them to reach this at a very affordable cost. So we were focused on driving down the cost of the device and the service.
00:15:41
Speaker
with the deployment being by the back. The other area that we were focusing on was we felt there were enterprises that were not using digital and digital payment acceptance. And we wanted to provide a platform that could easily integrate into the enterprise ERP systems and enable them to offer a digital payment acceptance after delivery service agents.
00:16:08
Speaker
So for players like Amazon and Flipkart, et cetera, wherever you have an agent on the field, being able to accept payment on the field, but also having that payment completely integrated into back end. So for example,
00:16:25
Speaker
while the early customers who really take advantage of this was Airtel stores where none of those you walk in and you do the payment transaction end of the day all of those papers slips had to be manually reconciled there was an interpreter department in the finance team in Airtel whose job was to call every store and say please you reconcile and hit the reconcile button otherwise our system won't do it
00:16:50
Speaker
once we have deployed our integrated solution where it's automatically reconciled every system is updated they didn't kill right it became so more proficient
00:17:01
Speaker
So we were addressing the enterprise segment with very complex integrations and a modular architecture that allowed us to do these complex integrations very easily. And at the same time, we were building a low cost WACFOL for banks to deploy. In neither of these models, did we actually have a large speed or speed model?
00:17:28
Speaker
and we did experiment with it and we found that is a very high burn model and we decided we're not going to go down that path.
00:17:38
Speaker
Here, like the Airtel example you gave me this year, talking of reconciliation of the card swipes. I remember there used to be a time when I would swipe a card and the merchant would keep one copy in their cash register. You might have seen a little metal stick that they just put up. Yes, yes. You take it out and match everything. I had always forgotten that they used to do that and now they don't.
00:18:03
Speaker
You don't need to do all of that. So that was part of the revolutionizing that we had achieved by driving down the cross and driving this digital digitization. So essentially for a large retail client, you would be like payments plus workflows. Not only would you do payments, but the workflows after that, you would have to win that as well.
00:18:25
Speaker
Absolutely and what was the economics of it like typically I believe there's a 1.5 to 2 percent. Yes if you were so if you are there are two again there are two different models one is you are the acquirer yourself okay you're an aggregator so you go out and acquire the merchant the merchant then would be an easy tap merchant and easy tap would have a bank behind it
00:18:54
Speaker
So, in that case, when a merchant gets paid 100 Rupees, Easy DAP could sell the merchant. We're offering you the service for 1.5% fee.
00:19:06
Speaker
Okay, easy tap will get to keep that 1.5%. But out of that 1.5%, it has to also pay the issuing car. So the customer's current company has to be paid, MasterCard has to be paid, Visa has to be paid, et cetera. That isn't a very, there isn't a margin. There isn't actually, in most cases there is no margin. India was already very competitive.
00:19:30
Speaker
Right. Because I don't know if you are aware, but a most cards today are platinum cards. The interchange on platinum card is 1.8%. Which means the acquirer has to pay the issuer 1.8% no matter what. So the, even if the acquirer is only charging the margin 1% or 1.5% they have to eat the Delta.
00:19:59
Speaker
the
00:20:15
Speaker
very expensive proposition. And we believe that this is one of those things they told me when I joined as Barbie. I remember why Barbie telekinesis. Look, we believe MDR is under pressure in markets like India. That isn't going to be our primary focus. We're going to focus on software as a service and just charging a subscription fee to our banks.
00:20:39
Speaker
you pay out a hundred rupees but month but Domino 120 150 hundred dollar rupees and then if you wanted more integrated solutions we would charge you right as we taking more complex solutions would get charged a bit more and the elders was a monthly subscription fee
00:20:59
Speaker
For customers taking a more complex solution, it was per terminal pricing only on a different... Yeah, it was mostly still a per terminal per month fee. There were some exact exceptions where they said, we're doing it in live form, you give us a black form fee, et cetera. But in general, it was a per terminal per month.
00:21:19
Speaker
OK, OK, OK, got it.
Transition to Software and Leadership Changes
00:21:21
Speaker
And in addition to this, you would still charge them the one-time cost of the terminal and that you became device agnostic. We became device agnostic. In fact, the terminal was often provided by the bank. The bank would buy the terminal. Initially, they were buying the terminal from us.
00:21:39
Speaker
and then giving it to the merchant and they may sell it to the merchant. They may give it for free to the merchant. It just depends on their relationship with the merchant. And perhaps if you did so much transactions or you maintain so much balance, they will give it to you for free. Otherwise they'll charge you something, but they were buying it from us. And today they don't even buy it from us. They just buy it. We tell them, Hey, you just get part of what Donald's you want. We'll provision it on our system. Okay. Okay. Okay.
00:22:06
Speaker
They were just paying you for the software that was connecting the terminal to their ERP. The terminal itself was provided by their bank to them or they bought it directly.
00:22:18
Speaker
Actually, in that specific case of the Airtel, they bought it from us. We actually did more for Airtel. We actually developed the app. So the app that was running on the agents terminal in the Airtel store was also developed by us. We had like the Airtel deeper work that we did with Airtel. They were a little different, but typically
00:22:42
Speaker
The enterprise would often get the dominoes from their bank of choice, and we would deploy the software, we would send the additional linkages that would need it, and then we would get paid typically by the bank or in some cases directly by the merge.
00:23:01
Speaker
Okay, okay, okay, so this was a fairly good cause of not relying on the MDRs, because we all know what happened to MDRs in India. Yeah, MDRs just collapsed, right? And we saw that coming, and I think that insulated us, even when, for example, when COVID hit and transactions stopped,
00:23:26
Speaker
Our services didn't stop. Our service speed didn't stop. We obviously reduced some rates and we cut some deals, but our revenue didn't go to zero. It dropped by 20%. Well, but it didn't, didn't complete the disappear. So that, that was the trade off we made in going down that path.
00:23:44
Speaker
And where we see the opportunity to participate in the BIPs is when there are additional value added services like EMI, et cetera, being offered to the legend or credit, BMPL time credit, then we can get a credit conversion happens. We could get a fee for that, et cetera. So that's an opportunity we believe is still out there and we're working on.
00:24:11
Speaker
The transaction, the payment itself, we believe was largely a commodity. You did the 25 million fundraise in 2017. Why did you need to raise such a big round? Because you were not in a cash burn. Your business model was not cash burned, right? There was no cash tax. You didn't need to spend on freedom street and all. No, you're right. The reason we did that was we had just won that SBI deal.
00:24:40
Speaker
and okay and we were building devices which at that point we were still losing money on the device because we it was costing us 3300 we were pricing it at 2500 which we felt once the volumes come down we could make there but for the next couple of next year or so we would need to sink some money
00:25:01
Speaker
And then as we were trying to ramp our business, we also wanted to experiment to see if we could help SBI speed up the process by also deploying our own salespeople at the same time. So the device portion of it did suck up money in that interim. That was where our burn was, even though we didn't have significant burn on the acquisition side, we were having device side burn. Okay, okay, got it, got it, okay.
00:25:29
Speaker
You went through that period where the original founders left a new transition from CFO road to a CEO road. Tell me about that period. Was it like a very high stress period for you? And just tell me the story also what happened. So we had been doing this was in 2018. I remember
00:25:50
Speaker
We had, I had just come back from a board meeting from the US and Bobby was still in the US at that point.
00:26:00
Speaker
And he was going to come a few days later when I landed at the airport, there was a WhatsApp message from him saying, Hey man, when you get, when you land, give me a call. And I said, that was unusual. But anyway, I'd landed at whatever two in the morning, I was in the taxi, nothing to do. So I said, okay, if I'll be awake and it's the day down in the U S and he called me.
00:26:25
Speaker
And knowing Clay, I am absolutely knowing Clay, right? I was just completely surprised. He said, Hey, look, I've been doing this for a while. And yeah, I've been.
00:26:39
Speaker
this opportunity has come from WhatsApp. And that seems like an opportunity to really make a big dent in India. And that's something that I'm really excited about. And I've told them all of this. My job was on the ground. Because I hadn't
00:27:05
Speaker
It wasn't that there was any flags saying, hey, something like this might be coming in. I think it was Tokyo. And then I thought about it and I said, okay, I was playing an active role in running the company. I could continue to do that. And then in whatever capacity.
00:27:22
Speaker
So, somebody came and talked to me and he said, hey, was this happening? Would you be willing to do the acting CEO role or would it initiate a formal surge? So, I said, absolutely. And I hadn't thought, I hadn't come into this envisioning wanting to be CEO or it just so happened, right? And I just said, okay, amen.
00:27:45
Speaker
didn't feel like I could walk away because if both of us walked away, then the company would be really hit. We had split the job between us quite well, so either of us could have covered for the other. But if both of us left, that would be a big hole. And then this was November 2018, and I took over as acting CEO. And in one of the decisions I'd
00:28:11
Speaker
made and it was coming to that wasn't it just so happened that i was at the helm and actually pulled the trigger on it was that we would get out of our device business because that's where our burn was and as i was looking at how we move forward there were devices that were available at lower cost than got from other suppliers didn't make sense for us to keep burning devices and it's not just the cost of manufacturing the device
00:28:36
Speaker
We actually had to have a hardware team that engineered the device, certified the device, kept up with every change. Every change requires a new certification.
00:28:48
Speaker
the the
00:29:09
Speaker
we got out of that, but one of them, the consequence of me making that decision to get out of the hardware business was that, but that who was there as the hardware partner, there wasn't the role that he was looking to play wasn't, was gone away.
00:29:26
Speaker
So then, but as a new look man, we are shrinking in our, we know what to do instead of designing new products. We just want to continue supporting the existing devices. That's going to trickle down over time. It doesn't make sense for me to stay on and thinking of some new ideas and stuff.
00:29:42
Speaker
and which was the consequence of the decision, but the decision was economically, it made sense. There was a lot of emotional attachment. I'm also a product guy from the first day I was here, with Sid, with Bhakta, and with the product team, trying to say, why don't we do this, do that, create. And it was something that was very dear to me. But if I looked at it dispassionately, it just didn't make sense to do it.
00:30:08
Speaker
and I'm glad we made the call was that was the right call was a tough call but once we made the call they didn't make those leaving them was made sense or at least fall out of that and then so three months later which is the of of 2019 the board came back and said they had done an extensive search they had interviewed they had interviewed me they interviewed few other players and they felt that I was running the company
00:30:36
Speaker
Well, Penguin asked me and hired me to stay on.
00:30:41
Speaker
You made that transition from CFO to CEO. Your way of thinking, decision-making, all of that must have also needed to evolve. Tell me about how your decision-making models evolved from the CFO lens to the CEO lens. Yeah, it did. As much as I'd like to respond, I know I was already thinking like this. No, it did. As a CFO, I took a very
00:31:07
Speaker
economics first look at the business. And sometimes when you do that, you miss out the strategic aspects.
00:31:18
Speaker
or you undervalue those or you get also overweight the economic factors versus the other factors. And that was okay for me to do because I knew Bobby would cover those factors. I would play the financial perspective card. He would play the business card and in between the two, we get to the right decision, right?
00:31:42
Speaker
But once I switched over, suddenly I had to do that and I was coming from this other space and I had to turn the transition over. And now there are employees and my team members will say they did see the difference. They would think, would have previously come and talked to me and said, hey, should we do this? And I say, this just makes no sense. Don't tell me how you make the money. And I'd shoot it down and then you'd get up and go, then we'd have to move around. Now I'm like,
00:32:12
Speaker
Yeah, but let's try this even if it doesn't make economic sense up front. Let's examine all the other possible angles and then make a decision. I had switched. There were some decisions I looked back and I said I was perhaps too
00:32:29
Speaker
Maybe I took the wrong decisions and I'm looking back in hindsight where I was sitting here, look, that's as low as we can go. I shouldn't go any lower. Let's cut our loss here. But in the process, I opened the door for somebody else to come in into a customer, into a partner where I shouldn't have let that person come back, someone else in.
00:32:51
Speaker
cost us more to go back and get share, et cetera. So there obviously was earnings there. And so it is a suite that is required.
00:33:01
Speaker
Basically, you're an appetite for risk increase. Like you started taking more risks. I had to take more risks. So you have to have that ability to be willing to take completely unjudged risks, but certainly your risk appetite has to go up. And for me, I was in a transition where I was still CFO and then I had taken on CEO. I didn't have a counterbalancing.
00:33:24
Speaker
Rolled Bobby and median and Yang if I could go hard and he tried away He the I know where his mind that was I couldn't read account the foil for that and yes of us And suddenly when he had both roles in one it caused me to really think hard about what I needed to do differently And what I perhaps was missing or didn't do I had to change and yes, that was a big change
00:33:49
Speaker
How is the business doing in terms of what kind of top line was it generating? If you could just to understand the growth, like 2014 you joined, since then what kind of top line has it been? Throwing it. That's so far back, man. You're going to ask me. The numbers are not very broad, whichever years. When we were joined, we were subbed. I think at one, I remember the time we were trying to cross one crore in bracket.
00:34:17
Speaker
but the Edward would in one we were trying to crow across at the point one crore of er of mr monthly recurring right right now and so that would be 12 growers monthly recurring so let's at that point let's call it roughly two million or he might have you with way less than that and the goal was to get past that it's
00:34:42
Speaker
So then with our SBI contract and HDFC and partnership we were growing then when I made the SBI, like I said, the economics didn't quite work out.
00:34:56
Speaker
on claiming damage we had misjudged when we did the the rsp of what the now it's would be came in point we had to pull out of the partnership and we say a lot we can see this because we're losing money on a lead every deal would not make money so i had to pull out of that and that took a hit onto our revenue flattened our right and and but then coming into 2018 into 19 we saw nice revenue grow
00:35:25
Speaker
19 at 20, 21, 20 to 21, we were growing 67. When you stop selling your hardware, that will also cost a lot of revenue. Even though it didn't hit our bottom line, it improved our bottom line, but it hit our revenue. So the revenue was flattened because our device revenue just went away. And even though our subscription revenue was growing, it was being offset by the decrease in the device revenue.
00:35:54
Speaker
and internally for management purpose but purpose is we really were only focusing on subscription revenue we knew it was for us to a silver means to an end and we knew that that wasn't the end goal because a device business margins are very low and I'm going to get valuation of device business etc. It's a subscription business that's about a little piece and that's the one for this
00:36:19
Speaker
Okay, okay. So what did you close last year in revenue wise and this would be like now 100% subscription
Razorpay Acquisition and Future Vision
00:36:26
Speaker
revenue. It's almost we do have some legacy customers who still have some vice business there, right. But between if I look at just the subscription revenue last year, we did over 10 million.
00:36:41
Speaker
in AR on that. I was a 15%, 68% rolled over the prior year. Okay. And this is not MDR said, this is the prior device. This is net revenue, right? This is not the inflated by MDR, et cetera. It's just if you're a subscription revenue. If you look at total revenue last year, we would mostly do 14, 13 and a half to vote.
00:37:09
Speaker
tell me about razor pay the acquisition which just happened what led up to it then so you know what led up to it is we had so i took over in 2018 really 19 star we started changing cellophores tactics and strategies we started expanding on the bank front we were doing well we had done a last the last round we had done was in 2017 we had relatively low bar we were
00:37:38
Speaker
still living off of that. And I had gone back to the board and I said, look, if we hit these metrics, I will be very optimistic of future growth and I want to go invest in that. And when we get that, I'm going to raise money. I'd set the expectation way back when I said second half of 2021, we're going to go out in the market to raise money for 2022.
00:38:03
Speaker
But why did you need to raise money? Was it for spending on customer acquisition? It was on spending on customer acquisition. So the place that we wanted to go after, remember I told you we do SAS, but we were missing out on a source of revenue, which is going after EMI.
00:38:23
Speaker
OK, and this is where Pinehead established a good franchise and it's worth tapping into. We needed to go into do that, but to do that, we had to both build the systems, get the people that was investment needed. We also followed convergence coming of online and offline.
00:38:40
Speaker
Okay. I knew I had to play in online in some manner. It didn't make sense for me to go head to head with the big established people because I would require deep for kids in a long lead time to build that, but there were niches and ways that we were thinking of we could enter in and still be relevant at least for certain segments. We had customers who were coming to us and said, Hey, man, can you do, you know, both sides of this? Can we, and we were beginning to do offline online.
00:39:09
Speaker
payments in SMSB, etc. So we're also looking to scale some of that. That's where I was looking to invest and I still now so that hasn't changed. We were out in the market looking for that. The EMI product would be the lending partner whom you would work with. So there's different kinds of EMI. There is obviously the credit card, debit card EMI.
00:39:38
Speaker
and not was doing integrations with more and more banks to get more and more EMI debit card. Then there is brand EMI, which is doing it acquiring brands and integrating into their systems to offer brand EMI. Then there is NBFC EMI, which is integrating with NBFC lenders to offer their EMI, right? We want it off compulsory, all those phones want to do.
00:40:05
Speaker
so we were out we had we got to hire an investment banker to lead the round but at about that time Bill came and talked to us yeah he had actually talked to us even before we had started the fundraise back in April or May of last he had come and talked to us and we said look we're not looking to be sold we are actually going to be going raising money later this year but you want to chat we're happy to chat with you
00:40:35
Speaker
And we chatted. Then I didn't hear anything from them. We continued to go raise money. And then Harshall came back and called me and he said, look, we met with every player in the industry. And we really think we looked at how you guys do product. You look do the product like we would do it.
00:41:01
Speaker
He said, look, the first time we thought of going offline, we're a product first company and our first inclination is to build it ourselves, right? We thought about it, but then there's a lot of learning code. It takes time. There's more to it than just the product. And so we looked at partners. We found you guys have done it the way we would have done it. No, you know, is there any way we could, you know, come together?
00:41:26
Speaker
in the market to raise funds, what happy to entertain interest in the salad conversation. So that's how it started. Part of that was it's also, it was a process where I needed to get to know them. And then they weren't the only ones who came and spoke to us. There were other people who were interested as well.
00:41:49
Speaker
Okay. Like in acquisition or in funding? You know, in acquisition. We had the conversation and going back to just my own personal journey of coming from Intel to EZ DAO. Some of the same metrics I was still looking for where it was that it wasn't just a product fit.
00:42:09
Speaker
Where is the cultural fit? Where is that complementariness? And one of the things we loved about what we saw with Razor Bay was their vision of the market and where it was going was the same as us. Their operating philosophy was similar to us. And their product philosophy was also very similar to us, right? And so that gave good comfort as we went through that.
00:42:36
Speaker
So what is their vision of the market and how does EZTAP fit into that? Their vision is that payments are effectively going to be on the channel.
00:42:51
Speaker
The notion of being able to service just emergence one side versus another where the two systems don't talk to another isn't going to be about the future. The future is where it's all the merchant sees everyone. If they're a GP, you could walk into a store and store doesn't have the stuff, the item that you need.
00:43:13
Speaker
and you could just be at the counter, order it from the online store. When you just be at the counter on the store, you go and where will your remote location as it gets you.
00:43:24
Speaker
It blends in the online, offline, it provides the merchant with one single dashboard of what's going on across the entire shop, companies from a sales perspective. And it wasn't just omnichannel payments. Remember, we're all looking to do all the just payments.
00:43:47
Speaker
right raise a pay is doing payroll for the small loan right they have corporate cards their loyalty we had envisioned the similar structure of loyalty we're seeing things in those things are also really on the channel you should got to be able to do it offline or online loyalty you can have one solution for it online one solution for offline that doesn't make sense
00:44:11
Speaker
So the vision of that, the convergence in payments and the adjacencies around payments within the merchant, there was a, we, I felt that, Hey, we have the same vision. Right now we were at different starting points and coming at it from different sites, but it was pretty complimentary in how I saw it. Okay. Okay.
00:44:33
Speaker
So is the pay applied 80% state? So who has the remaining 20%? Is it the founders and you? It's a complete, it'll be a complete transaction. It's just this time timing on a portion of it, but it's really very good. So like you would get shares in Razorpay now and the other founders and the investors unless someone wants to cash out. Yeah.
00:45:00
Speaker
Okay, got it. So what do you see your role now going forward? Okay, two things. One is, continuing to tackle the offline segment. There are differences in that business. And with a set of people and managers who've come with that experience, we need to continue to build that together with Razor Bay. That's important and that's why we're doing this deal is to go after both markets and we need that. But I also have a role of making sure that
00:45:31
Speaker
We integrate well, right? We execute well together. And I've been in a lot of acquisitions in my diamond, Intel, and seeing a lot of failure, right? So I'm very aware that there are things that either side can do that sort of will lend itself to success or to failure. And so part of my role is also just putting that change.
00:45:57
Speaker
and making it successful because it's in both our interests to make this tremendously successful. At a technical level, what are those things that you could do to make an acquisition successful? I don't know whether there's one recipe. I'll tell you what things, examples of where it has failed, right? Every team and the teams now operate as us versus them.
00:46:26
Speaker
I'm mad that I look back even within our experience at EZTAP where we had acquired a company. And for the longest time, they were referred to internally as that team. They're no longer there with us. Why? Because we didn't think of them more integrated, holistic. And I told my team that I said when we had a meeting, I said, look, we've got to now think of ourselves as race open.
00:46:53
Speaker
We can't be saying here, we're easy tap. There is a fit. No, we're always. We've got different charters. We've got to go off the law flying business. They're going off the on light. We're going to go stuff together, but we've got to think as one. And to me, that's super critical. And, and to me, there is no ego on here. What do we call ourselves? Is it easy to opposite ways of paying? No, I make sense to me. You build one brand.
00:47:18
Speaker
the the
00:47:37
Speaker
So I want to make this business successful. You can call it easy. You can call it something else. And in the past, we haven't thought changing our names. So I'm not wedded to it. Okay. Okay. Got it. Another thing I've seen that leads to failure is when you try to over engineer, I remember when we, we'd acquired company at Intel and they'd have a hundred people.
00:47:59
Speaker
coming down the company, somebody's saying, okay, now all these systems have to change to X, this has to change to that, this has to change that. And the management team was so old, well, they were looking at the business, they were so consumed by the integration and they lost that business.
00:48:18
Speaker
So that's all those things I'm going to be looking out for and saying, Hey guys, if this is wishing too much in terms of acting to the business, then let's find the right, a better timing for that. Do you see yourself in this role in the long haul or would you like to start up again?
00:48:39
Speaker
Hey, don't you know, I don't think I want to do a start only startup again. At least at a point in my career where I'd like to build on this and I see the opportunity. Will I do this for everyone? No, absolutely not.
00:48:55
Speaker
Do I see myself doing this? And because we've got to a stage, I already tried the journey we have. We started coming and making it bigger and better. And with this acquisition, now we have even deeper asset pool to go after the things we want to go after and make it bigger. I'm excited about that. And after that, I'm going to retire and I work on my passions, which I restore cars. I build cars. Yeah. So that's my passion. So I'd rather go spend time on that after the next five years.
00:49:26
Speaker
What kind of cars do you restore? So I restore vintage cars. I actually do all the work myself. I build engines. I build. I do bodywork. I do suspension and electricals. I have a full-fledged garage. Actually, this isn't the U.S. thing, although in the U.S. it was much easier. I would go to a junkyard, buy a junkyard, bring it home, do it all.
00:49:53
Speaker
and then rebuild it, but even as a kid growing up in Bangalore, I would do such stuff. I worked in a garage here locally and three-year-old. I used to build stuff at home, look after them, tear down our car or motorcycle when I were rebuilding it. I love doing that stuff. In the neighborhood I live in, they call me mechanic while I was in the shoes.
00:50:15
Speaker
name was when they're walking by, they'll see me under the, lying under the car, working on the, etc. The local staff, they just call me like anyone.
00:50:25
Speaker
Amazing, amazing. Working with hands must be able to give you that complete time of downtime from... It's like not thinking about anything else. Why isn't this car starting? Or why is that thing not working like it should be? What's causing it? And how do I check for it? How do I fix it? How do I get that part? What is that part that I need? I'm looking at all those. And for me, it's just complete relaxation.
00:50:52
Speaker
so it's a fall of meditation, but it's not meditation, but for me it's my brain it's completely switched off. So I love that. I love it. I love it. Cool. I'll end with, look, just some tidbits over Johnny. We are now ramped to where we are processing 10 billion annualized GMV.
00:51:13
Speaker
We are used at 500,000 touch points across multiple countries in the UAE. We started our journey with buying the offline payment acceptance, but now we're sort of going into making it an omni-channel acceptance.
00:51:32
Speaker
and we're very excited about this journey and it's in an environment where this constant evolution of the types of payments, whether it's cards, QR, UBI, SMS, there's just so many things that are evolving, changing, and being able to handle all of that seamlessly for millions of consumers. I think it's an exciting business.
00:51:51
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 this show? I'd love to hear your feedback about 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 this 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.