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The ‘reluctant’ founder pioneering energy transition | Bhaktha Keshavachar @ Chara Technologies
170 Plays7 months ago
Once a tech wizard at Intel, Bhaktha Keshavachar shifted gears to co-found Ezetap that shook up India's fintech scene with its innovative digital payment solutions, and was eventually acquired by Razorpay. Now, at Chara Technologies, he is engineering a revolutionary Reluctance motor engine that's free of toxic rare-earth minerals.This nifty invention is not just eco-friendly and cost- effective, but is also set to slash India's import dependency and give a turbo boost to the nation's electric mobility dreams!
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Read more about Chara Technologies:-
2.As the EV market vrooms, this Bengaluru start-up tries to get its motor running
3.Trio Builds EV Motors With No Toxic Rare-Earth Metals, Cut Dependency on Imports
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Transcript
Introduction and Career Journey
00:00:00
Speaker
Hi, I'm Bhakta Keshwachar, CEO and co-founder of Chara Technologies.
00:00:18
Speaker
If you like epic stories featuring a tireless hero tackling large problems then this is the perfect episode for you. Bhakta Keshavachar spent more than a decade with Intel in its heydays before returning to India and deciding to be a founder. He founded EasyTap along with Sanjay Swami who is today well known as the founder of Prime Ventures. EasyTap was a pioneer in the fintech space in India and was recently acquired by Razorpay and that journey by itself was a fascinating one.
00:00:46
Speaker
But Bhakta is still not done chasing large problems and he is currently the founder of Chara Technologies which is building a global first-of-its-kind reluctance engine that would power the energy transition revolution the world is currently going through.
Entrepreneurship Motivations and Challenges
00:01:14
Speaker
Okay. We are live now. So, Bhakta, you are a serial entrepreneur, a very seasoned veteran of the startup ecosystem. I'd like to understand your journey of how you first became a founder and your first venture, and then we'll talk about the current venture, which is Chara.
00:01:34
Speaker
Yeah. Yes, I am an old guy. Another way of saying he's an entrepreneur. Thanks for saying that. But it is true. So just on my journey, you know, I started my entrepreneurship very late in my life.
00:01:50
Speaker
normally when I kind of hit my midlife, this one. So it could be a midlife crisis, but it was actually a combination of other things. So I was born and brought up in Bangalore, studied here like most people in the early 90s, went to US for higher education, did that, stayed in the US, worked primarily for Intel, a large semiconductor corporation, mainly the hardware area and wireless communication.
00:02:20
Speaker
for about a dozen years before moving back to my hometown in 2006. Many reasons for moving back family, cultural and opportunity also. I believe that time and I continue to believe that India is the land of opportunities now in spite of
00:02:41
Speaker
All the perceived are real issues that are thrown about our country. So once I moved back to India, I still continue to work for Intel for a couple of years. Then the answer. What kind of work were you doing at Intel? Was it software side, hardware side? Hardware side, mostly in the chip design, in the architecture groups. I used to build models for the processors before they were built.
00:03:09
Speaker
and then these models are used for a lot of other validation and performance analysis much much later even after the chip is shipped. So, like you would decide what the chip design should be through a simulation and then it would go to another team to convert the simulation into hardware.
00:03:31
Speaker
into hardware, into RTL, typically, and the RTL is finally, RTL is registered transfer language. This is how you specify the hardware. And then it's converted into a chip in the fabrication plant, which in the case of Intel, it's a vertically integrated company, so it has its own manufacturing plant.
00:03:50
Speaker
I worked on several processors, both x86, and there was a project called Nitanium, which some people might have heard, and then of course some of the wireless processors, which Intel was trying to build. So once we build the model, the chip is fabricated, and then when the chip comes back, there will be, we all hope everything works well, it does not. So there will be functional problems, there will be performance problems.
00:04:18
Speaker
So functional problems are usually called by validation. Again, if there is an intricate problem, then they go back to the model and see what was wrong. Because in the model, we can see inside. The chip we cannot see inside. That is the usefulness of this model. Even after the silicon comes back, we can go and see what went wrong. Then performance. Then we run the loads, software loads, of course, and see what is wrong. And then we fix the issues. So typically, Intel took about
00:04:47
Speaker
three to four iterations before shipping it to customers. We call it Stepping A, B, C. I think C typically went to large scale manufacturing. And then it of course goes into Stepping D and D for minor bug fixes and other things.
00:05:09
Speaker
Can I ask you an out of syllabus question and
Founding and Growth of EasyTap
00:05:13
Speaker
you can feel free to skip it. But what happened in the semiconductor industry that once Intel was a giant and now its market cap is probably 10-20% of Nvidia's.
00:05:30
Speaker
So one of my favorite questions and my favorite pet peeve also, when I used to work for Intel in the early 90s, it was the king of the hill, as we used to say. And I think there were, in my opinion, I was an engineering manager there. Intel is a large company, so please take a pinch of salt, what I say.
00:05:54
Speaker
Intel was a vertically integrated company, which means that they did the design, they did the manufacturing, and of course selling it to the end customers, to the large companies, which worked very well for Intel. But I think one trend that happened later in the industry is that there were design houses, there were manufacturers. And right now there's only one manufacturer, which we all know is TSMC. So if you take Qualcomm, if you take Nvidia, if you take
00:06:24
Speaker
AMD, you know, Intel's big competition and ARM, ARM is of course are the extreme, right? They don't even bother to, or pretend to do manufacturing. So I think that model has worked out better.
00:06:38
Speaker
than what Intel did. And there is a reason. So Intel's know-how in manufacturing comes from its own products. TSMC is doing it for n number of customers. I think the n is closer to 100 maybe, right? So they learn from everybody and then everybody gains. Because TSMC is not in the...
00:07:02
Speaker
business of selling products, TSMC is in the business of making the process better. I think that is the trend which worked against Intel. That is number one. Number two, I'll go out on a limit and say this, it is a large company with the large company inertia, they missed two big
00:07:23
Speaker
opportunities, transitions. One is mobile. I was in the mobile group and that's one of the reasons I left Intel because mobile was not growing anywhere. Mobile is what Qualcomm today dominates with the Snapdragon. Absolutely. Intel was completely connected to Snapdragon or they were working on a
00:07:43
Speaker
alternative to snapdragon. Yes, Intel did work. It had several projects and Intel seriously bid for what is now called the iPhone, which we didn't know the time. It was a super secret. There were rumors that Apple, you know, Apple love it works, right? Intel did not know what it was doing.
00:08:04
Speaker
I think Intel completely missed a mobile revolution. And now, of course, I'm completely disconnected. It missed the AI revolution. And Intel had a project called Larrabee, which is all public knowledge. They just failed to materialize. That was a GPU project, Larrabee? Yes, Larrabee. Yeah, you can Google it. Larrabee is well known. L-A-R-R-A-B-E.
00:08:27
Speaker
So I think Intel missed both the buses, and I think that is mainly because of inertia, and Intel had a very profitable, still has a very profitable business. And so I think. For desktops, laptop servers, those kind. Oh, yeah. Yeah, Intel still prints money. That's what I always say. But this is my favorite statement. It's backed by data, I think, two weekends ago on Friday when Nvidia's market cap jumped.
00:08:56
Speaker
the difference in market cap was one and a half times the market cap of Intel. This is like blasphemy for old Intel people. I mean, this is, yeah, and Nvidia was like not even in Intel's rare view mirror. Okay. So, from what move from Intel, like what maybe, like you want to Intel,
00:09:24
Speaker
Correct. So probably two main things. One is that I was in the mobile group trying to do something in the mobile and it was not going anywhere, and I wanted to be in the mobile space, the expanding space, and it was not going anywhere. That was reason number one. Reason number two at that time,
00:09:47
Speaker
the local officers of the large MNC companies were mainly outsourced to design and validation centers. Apparently things have changed now. There is more product control and at that time it was like a development center or a validation center which I did not like. I wanted to do something new.
00:10:13
Speaker
And the last one, which is recurring theme for the last 16 years for me, is that, as I said, the land of opportunities. I wanted to always do something within India. And that would not happen in internet India. So I...
00:10:35
Speaker
I decided to start on my entrepreneurship journey and I did that, suffered for a couple of years because I come from a classic South Indian family where
00:10:50
Speaker
I checked with my whole family. Nobody has been a businessman. Agricultureists in the last century on bank employees. My father was a government employee. So when I left Intel with a fat salary, people were like aghast. Tell me that story. There must have been like a sequence of events which led you to quit Intel and start off on your own.
00:11:16
Speaker
the story of how you and Sanjay met and you must have had a couple of chats before the conversion happened. So, that story. Okay, great. So, after I left Intel, I was trying to figure out something to do. I started a company which a lot of people have forgotten. It was in the security space, did not go anywhere unfortunately, completely died and we formally shut down the company also. What type of security?
00:11:46
Speaker
So it was, we are trying to build how to make the laptop more secure. So today laptop is generally an unsecured platform compared to our mobile phone. So we're trying to build solutions for it, both hardware and software. And it went through its own ups and downs. We could not raise money. And one of the reasons
00:12:11
Speaker
Also now in hindsight was that we could not tell a story, proper story, a proper narrative. So it is all very valuable learning. Did you pitch to VCs? Oh yeah, we pitched to VCs. That time I pitched to about
00:12:32
Speaker
No, a little bit more, a little bit more, even more, both in the US and India. And I realize now that we made a mistake because we are not telling the story properly, not identifying the property.
00:12:46
Speaker
identifying the problem properly and customer references, all those things were missing. So it is extremely valuable lesson then I started. I guess the skepticism of India being able to produce hardware would have also been a barrier. So I know that still is there. I mean we had an investor on Monday and
00:13:13
Speaker
I mean, you know, I'll tell you what we're doing. You'll come to know. One of the questions he asked was very telling. He said, why has this not been done anywhere else out in the world?
00:13:25
Speaker
And I said no, I have no idea why nobody has done, but my approach is we should lead the technology revolution. And that was my answer. And then he said, now I see it. So I think that skepticism was much deeper. I think that was the time when the venture capital industry was still not mature.
00:13:46
Speaker
To be fair, to be fair to the people who be pitched. It was just not there. I think it started after 2009-10 when EZTEP was born, Flipkart was born. And after that, of course, it has been a fantastic journey.
00:14:02
Speaker
I think these were the reasons, invaluable lessons we learned. Then I was trying to figure out what I wanted to do. I had met Sanjay Swami, which whom I didn't know before. He was also from Bangalore. We all both went to the same college as St. Joseph's and UECE. I had met him, had gone to his house to discuss a few things, and he had just come out of Amchek.
00:14:29
Speaker
which was another very prominent startup in 2009 timeframe and I had gone and met him and I told him that this is what I was planning to do and we were discussing a bunch of things and we walked out of the house and we can check with Sanjay
00:14:50
Speaker
He tells the story. We walked out of the house and he said, hey, I'm building this device in FinTech. And do you know anything about hardware or how to fix this? And I told him, yeah, what are you trying to build? And he showed everything. And I told him, you are doing everything wrong, both theoretically and practically. And then he said, OK, anyway, you are free. Why don't you come and join me? Did you zoom in a bit? What were they trying to do? And what was wrong with it?
00:15:20
Speaker
So yes, so this was 2010. This was 2010. It was incorporated in 2011. So this was before incorporation. So that time there was this company called Square in US which had done this device which you can plug into your phone and do a credit card transaction.
00:15:40
Speaker
We wanted to do something similar, but phones were still not there in India, so we wanted to build an integrated small device where people can make transactions using that time the 2G networks.
00:15:55
Speaker
So he was building a device and he had outsourced the engineering to a company. I really can't remember the name. It wasn't Indran like that that much I remember. And those guys were screwing around in another way to say it. So both hardware-wise and software-wise. And also an architectural thing. That time we didn't have good data networks.
00:16:23
Speaker
So we were using the voice channels to send the data. This was 2010, you should remember. There were no smartphones. There was a famous Nokia Flip and similar devices. And I had worked on wireless and mobile. So I told him exactly what was being done incorrectly from a technology point of view. And then he said, come and join. So that is when we started working with him
00:16:52
Speaker
roughly Q3 about August, September of 2000.
00:16:59
Speaker
And then I still remember in the very last week of December, between Christmas and New Year, we did the first transaction. So I was in Indranagar, Sanjay is a white wheel resident. And he said, let's meet in the middle. If you know Bangalore, there is a place called Marathali Bridge. Just kind of roughly halfway this one. So we met there like late 10 o'clock traffic was dying down. This was Bangalore 15 years ago.
00:17:27
Speaker
and we made the transaction. So if the card, we made this thing, and then Sanjay was convinced. So that was actually a standalone device. Then Sanjay said, no, we go full time, we will do it. And given Sanjay's background, he has the contacts and the capacity, he's a business guy, capacity to raise money and all that. So I did not have any doubts about it. I started with him. We just did a handshake, literally,
00:17:57
Speaker
with nothing written down, not even this take. We just trusted each other that he would do the right thing and that continued till we exited.
00:18:09
Speaker
Yeah, it does not change. We went to ups and downs, both in relationship and business. But to the fact, I wrote this in my blog when we sold ezeta. That part had never changed. We never disagreed on what we promised verbally until the last moment.
00:18:29
Speaker
till the transaction was complete, which took her that 10 years. So we did that. And then we started full time. Then we did more market research. And that's when we realized that we should do an appendage to the mobile phone. Everybody had a mobile phone. We put this appendage. And so then we can enable millions of merchants to do the transaction.
00:18:52
Speaker
This square model, but we had to work with the feature phone. That was the technical challenge.
EasyTap's Acquisition and Transition
00:19:00
Speaker
So we started working with the feature phone. We built the first few devices, made it work on this one. Then we hired. The audio port. Yes. 3.5 and Jack. 3.5 and Jack. But this was a feature phone though. So there were no apps. So you could record audio track of the whole thing.
00:19:26
Speaker
It was a digital version. Then upload it to the server. In the server, we decode it. And then we send it to the networks. These are master or whatever it has to go. Then the transaction would come back. And we send again an audio channel. This will decode it and say yes or no.
00:19:43
Speaker
It actually worked. It's a very clever hack. It is a very clever hack. This is how modems used to operate. This is the same modems.
00:19:59
Speaker
And so I was a hardware guy and an embedded firmware guy. So we needed the network part, right? Where the network transaction has to happen and all. So we hired Satish was the head of engineering. And he was one of this, he's one of the smartest engineers I have ever seen in my whole life. You tell him what to do and he will think about it.
00:20:25
Speaker
And the next morning, the server app would be there. So that's the way. So myself, Satish, and one more guy who wrote the app. So this was not the Android app. This is the app on this feature phone. It's a little bit crazy. It was using Java byte codes and other things.
00:20:43
Speaker
We showed this to a bunch of people. Sanjay raised the seed round of a few hundred thousand dollars. By that time, the smartphone revolution had kicked in.
00:20:59
Speaker
The smartphones were becoming common then of course it was only for the the rich and famous initially the Apple phone And then there was this fight between Nokia Samsung and Apple, you know who would win
00:21:13
Speaker
but then Google came and did Android and then Android just took over and we also switched. So we basically went again to the audio port of an Android phone or an iPhone and did our first device, which we call as V1, after lack of imagination. And that was, oh, it's very bad. And that used to plug into the audio port
00:21:38
Speaker
that time it was only swipe card, you swipe the card, it'll go the audio, it'll go to the thing, and we launched. We had customers like Flipkart, we had customers like BigBasket, and we had small customers, and they all liked, and we went like this. One question here. Only a bank can issue a pause machine, right? Yes. If I'm not mistaken. We always needed a bank.
00:22:05
Speaker
Okay, so you had a bank who agreed to loan their infrastructure or their switch or whatever. Yes. So we worked with HDFC. HDFC was our first bank and then we had to get agreements from pretty much everybody, Visa,
Chara Technologies and the Energy Transition
00:22:25
Speaker
Master, Amex, then PCI. It takes a long time. What is PCI?
00:22:31
Speaker
a payment corporation of API. This is the international body which governs all the certifications. And then- So, the post machine had to be certified? OYAL by PCI. So, we had to do all of that and then we needed a bank. Bank is the only one which can
00:22:57
Speaker
store the money. See, we just do the transaction like a hot potato or somebody's fights and we just push it out. Visa does the same thing. Only the bank can store money. So we always needed a bank. And this was the time and this is my favorite theory that every 10 years there is a big opportunity. The 90s to 2010 was the internet.
00:23:25
Speaker
And that is why Intel wound. So people bought PCs because not because they wanted to run Excel, because they wanted to get on the internet. And of course, 2000 to 2010 was the social media, Facebook, and a bunch of other people. And a lot of people died also, this one.
00:23:43
Speaker
Then for India specifically, 2010 was when the digitization of the Indian economy had started, which included Adar, which included the payments, a bunch of other things. The whole economy was getting digitized and payment was just one small part.
00:24:04
Speaker
And that is the trend we were riding on. And that turned out to be true. And I'll tell you what is the trend for my current company later. So that is a trend we caught on. And so why I'm saying this is then the banks were also open. They are super conservative.
00:24:20
Speaker
HDFC, SBI, I mean when we went to SBI, they used to point blank us to tell me what is your runway? How long will you survive? And they used to show the posters, this is a bank which preceded the Indian independence. It was called the Madras Presidency Bank, which became the SBI later. I didn't know that, they taught me. So on this, but they were looking at the new digital India.
00:24:47
Speaker
I know Digital India was also led by Nandan Illakani and his Ice Spirit group. So all these things were falling into place. And then, of course, the digitization of the trade was also happening, which is basically the Amazons and the Flipkarts and the Big Baskets, digitization of the insurance, digitization of credit, all these things. And everybody needed a payment device and a mobile payment device.
00:25:15
Speaker
And that is the market we tapped into. And Airtel Reliance, people were ready to experiment with newer ideas. And that went very well. And then that was V1. And then. One question here. How was your revenue happening? Was it there is a merchant discount rate? Were you getting a share from the bank on that? Or was it a? No.
00:25:43
Speaker
Correct, so that was a big discussion that happened internally. I still remember it went on for weeks. We want, there were some people who said we should take a fraction of the MDR, a percentage of the transaction in general. But what we thought was that would become, it would be a difficult sell. We said independent of money. Difficult sell it to the bank? Difficult to sell it to the customer, because he would lose that money, right? The percentage comes out of his money, eventually.
00:26:14
Speaker
A customer is not aware that the bank is sharing the MDR, right? Because they know that they have to pay. The bank will never share. The bank will never share. So you would have to charge the customer more. Okay. Exactly. As a percentage. And that would be a hard sell. Which today, banks have started sharing. I believe a lot of fintechs in this card and all that space through MDR.
00:26:39
Speaker
They started sharing and that time we said an easier sell would be, see after all we are providing a service which is consummating a transaction in a mobile way. That's all we are doing. So in some sense, it does not matter whether I'm doing a 10 rupee transaction or a one lakh rupee transaction. I'm still doing the same due diligence, same work I'm doing. So we said it will give you a fixed monthly fee.
00:27:08
Speaker
which was a few hundred rupees that time. And that worked out really well. I think that also gives... But since we're in the habit of that anyway, right? Because I think even when a bank would give a standard pause machine to a merchant, they would charge a monthly rental. Yes.
00:27:24
Speaker
Yes. So this was equivalent to that monthly rental? Equivalent to that. Yes, monthly rental. We would sell the device and sell the service as a monthly, this one, and then irrespective of the transaction. We bit our tongue a few times. I still remember, I don't know why anybody would do this, but there's something called a black American express card. It's not people like you and me don't get.
00:27:53
Speaker
So that guy took it to a luxury car showroom and he swiped it for one and a half crores. We had to, yeah, yeah. And that is the time we thought, oh man, we should have tried the NDR for this.
00:28:05
Speaker
But anyway, even the AMX guys called us saying that this transaction is going to happen, make sure the systems are up. Somebody big, I think, but we don't know who it was. Anyway, so that's what we did a standard search. And I think that was also worked well because now our customer, the merchant, knows how much he's paying, the certainty of how much he has to pay. I think all these things work better for us.
00:28:34
Speaker
Then also what we could do is we could add on additional services to this.
00:28:41
Speaker
and one was called reconciliation. You know, we reconcile all the accounts and give it to them. Amazon and Airtel and Webplasket never knew how much money was being collected, but since it was all on the computer, used to download the Excel file, and they would gladly pay another 50 rupees, another 100 rupees, for every, what they call as a transaction ID, for every device.
00:29:05
Speaker
So that worked out quite well and we launched and then we went through the series A funding funded by Chamath of social capital. He was Gung Ho on the Indian FinTech space.
00:29:22
Speaker
And then again things changed, chip and pin came. So we had to change the device. Chip and pin is a far more sophisticated device and then we have to send a lot of data. We tried with the audio, this one it barely worked. Then we switched to Bluetooth.
00:29:39
Speaker
So then it's interestingly, so this is classic jigat, right? You still had the 3.7 jai. It used to fit in the fold, but it never did anything. So it's just a mechanical, but it worked really well. I mean, the big basket used to come to my house and used to, I know, and he said, how are you paying? You know, at that time, it was cash or whatever prepaid. Prepaid was not very popular because of the Indian cultural thing it was.
00:30:04
Speaker
and he said how about he paying, of course I would say card and he would remove this device out of the card and put it there it's already paired and everything and I told him dude you don't have to plug it in and he used to look at me funnily like why are you telling me this I did not have the heart to tell him that is my device but anyway but we used to do this all this user experience research right how people used it
00:30:29
Speaker
And swiping was a little bit harder because the surface area is less. And we had several customers, again, Jugaad, right? They used to hold the card and move the device. Apparently, it was better. You know, things like this, we saw all of that. And then we built the V2 and the V3. And then the services also grew. And method of payments increased. It was no longer card. You know, there was UPI and there was the ATAR pay.
00:30:59
Speaker
which has not become very popular for many reasons. And of course credit, or you can pay by points, you can pay by credit, store credit, manufacturer credit, there are many, many ways of paying. So we increased all of that for the merchant. So easy tab.
00:31:20
Speaker
The signature for EasyTap at the beginning was the device. I can send you some screenshots. If you go to our website, circa 2013, V1 was there when you typed in easytap.com. Today if you type, it is like, don't worry about what type of payment, we will take care of it.
00:31:41
Speaker
whether people want to pay by card, whether people want to pay by UPI, you don't worry about it, we will take care of it. So it became a one-stop shop for all payment methods for a merchant. So I want to kind of understand the payment landscape a little better and very easy to fit into that. So
00:32:09
Speaker
A merchant payment enablement is something which Pine Labs would probably be the biggest player, I guess. Yes, Pine Labs is a larger player. So what Pine Labs does from what I understand is they provide these POS machines which are like co-branded with a bank. Yes. And then how do they take a share of MDR or they have a rental fees or something? So they have a rental fee and they also take a share of the MDR depending on the bank.
00:32:38
Speaker
So every bank has a different deal. You go to a small bank, you can negotiate a little bit.
00:32:46
Speaker
You go to ESBI or HDFC, the conversations are different. The scale is also different. Pine Labs has their distribution muscle. They would be able to distribute card machines throughout the length and breadth of the country. They would have feet on street who are going out from the smallest merchant to the biggest merchant would be using Pine Labs. Our selling point in those
00:33:11
Speaker
half a decade was that they were dumb machines. You do the car transaction, at the end of the day, your money would be credited, right? The sum of all transactions minus the MBA. But what we said is no, we want to make the transaction intelligent. So like reconciliation services, we can run analysis on the reports and feed it back to the customers. And for the e-commerce guys,
00:33:41
Speaker
This is all about user experience, right? He has his app, the delivery guy, and he'll come and ask, how do you want to pay? Card, he will press card, and the app will show up and say, please insert the machine. You'll insert the machine, swipe the card, the transaction will go to completion, take this little device, put it in his pocket, and keep going. That use of experience was a big deal, huge deal, and that is what became our signature.
Leadership and Team Dynamics
00:34:11
Speaker
the delivery boy started liking it. Because cash is always a problem. There is pilferage, and even they are afraid. You know, they collect 5,320 rupees, and they go to the delivery hub, they empty their pockets, and there is only 5,000. I have no idea where the 300 met. I might have given more change to somebody and all of that. So all these were positive things. So this was showing a net positive value.
00:34:39
Speaker
to the e-commerce price. So all the e-commerce, including delivery, were customers for us. And they spread it all over India. And then, as I said, we could offer additional services. I think that's helped. Then, of course, even Pine Labs. Your sales channel would have then been more of...
00:35:01
Speaker
trying to convert a few large enterprise customers rather than having. It was good to be. Feed-on-street who go out and acquire merchants. Yes. Okay. Yes. And finance was more of like Feed-on-street acquired merchants. Good to see. Yeah. They were good to see. Yeah. Is it up, try to get into B2C. As I said, the distribution is the key, like many business distribution is the key.
00:35:23
Speaker
B2B was far more profitable. And then there were a lot of government contracts also. If you come to Bangalore, the Bangalore traffic cops, you know, if they catch you. Oh, is it a device? Yeah. This was very humiliating, right? For me, I've tried using my own device.
00:35:49
Speaker
And before that, you know, in the early 2000s, I'm from here, I speak the local language, you know, when they catch me, the usual thing, right? I don't have money, you know, do whatever you want. And the cop, half the time let you know, he's like, they don't know, wait, wait, we have a card, I look at you, you're like an IT guy. Give me the card. Oh, yes, taught me.
00:36:09
Speaker
So BMT, Bangalore traffic police was a large customer. Then it went to Delhi also. Then we had all these funny incidents. There was an investor who said, dude, I paid my fine through your device. All that story is. And I think that was the big growth phase. And then
00:36:34
Speaker
Then I think for a year or so, we were still growing but not as fast as before. We were not growing at like 100 percent every year, we kind of dropped down to 30-40 percent. Then of course, this is what we call as the once in a lifetime opportunity. The government of India came and announced the demonetization.
00:36:57
Speaker
By the time demonetization came, were you still manufacturing hardware also? Because you started by making your own hardware in that state. Yeah, we were still making and we were like selling is hard, you know, we were selling, you know, growing as a company and all that. And then we got this Geroidal post.
00:37:16
Speaker
I know I don't watch TV. It's just my habit. And I was at home and there were like five missed calls on my phone. Like all it's ready to switch on the TV. Wow.
00:37:29
Speaker
they said your life is going to change, and I don't think we stepped for a quarter after that, because all the customers we were trying to sell, who were like, oh, why do I need my device, cash is working, and they all are not exaggerating, they all stood outside the office and said that, you know, give me a pass machine the next day morning. No, no, no, we can't give you a pass machine like that. You have to sign this, so many agreements, right, including this anti-money laundering, you know, a bunch of agreements.
00:37:58
Speaker
I guess every merchant would do like a tripartite agreement with you and the bank. And the bank. Yeah, so we had to do all of that and that was a massive boost and that's when we raised our series. But were you able to cope up with the demand in terms of being able to manufacture enough devices?
00:38:17
Speaker
Mostly, we let go of some business, then we became selective for a year, saying that we took only the good creative businesses. Amazon went from like 10,000 to 50,000 devices, meteoric rights, and then the Diwali case.
00:38:39
Speaker
How were they manufactured? Did you set up a plant? So this was contract manufactured? This was contract manufactured. So this was a pause device, fully functional pause device, chip and pin, untwipe, untap with a certified pin pad. We very proudly say that this is the only POS device designed in India, manufactured in India, and deployed all over India and outside India.
00:39:07
Speaker
And the easiest thing is we go to the PCI website, you look for approved devices by region, by country. You go to India, there's only one device. All the other devices are imported from our neighboring country. We wanted to know that Made in India was a big deal. Again, you go back to our website and it will show that Made in India lettering on the device very proudly. And then,
00:39:35
Speaker
After like 2018 or so, again, there were changes. Change is always a constant. The number of devices we were selling was not enough to sustain a hardware business. So we did the hardware business when we wanted to launch, grow, and all that. But for further growth as a company, the hardware was not an essential
00:40:03
Speaker
ingredient. So that is when we started getting other devices. The other thing is we were manufacturing one device, but there were several customers, everybody has their own requirement. So then we started introducing other devices. HDFC will come and say, I like this device, put it onboard it on your system.
00:40:23
Speaker
SBI will come and say ICICL. So we started that and that I think boosted the business quite a bit and then of course UPI came. Then it became more of a software play where your software is powering devices. Absolutely. We became a platform, a classic platform. Then of course UPI came.
00:40:44
Speaker
kind of reduce the importance of the post-missions. But again, post-missions have come back. They also display the QR code now. UPA came along and there are people who are telling the cards will die and all that. The death of cards has been foretold many times. I always tell people that when I moved to the US, that is when I got my first card, I moved, I got my card in 1993.
00:41:11
Speaker
It was a piece of card with a Visa simple, my name and some random numbers on it. I got a card three months ago from HDFC, it still looks the same. Yeah, I know it has a chip and it has NFC and all, it still looks the same. And the reason is, no people forget the user experience. When I go to a merchant, if I had to pay my phone, it's a little bit of friction. You know, you open the app, you know, aim for the QA, it works. But card is just amazing, you tap and walk out.
00:41:40
Speaker
I don't even wait for the approval. I know it will get approved. And the merchants I go regularly, they know that even if it doesn't approve, they will catch me the next time. So there is something to be told about cards and they will still
00:41:53
Speaker
be there for some time. And if I want to, you know, when my kids were at an age where they could not get cards but they could go to the store, you know, give my card and it still works. Yeah, it's like a store of money. People can take, you know, all those things. Anyway, so that was the story of EasyTap. And then we sold it to Razorpay, which is a good, reasonably good exit for,
00:42:19
Speaker
for the employees, for the investors, and of course, a little bit for the founders too.
00:42:27
Speaker
But you left EasyTap like a couple of years before the result. Yes. Couple of years. Yes. Yes. Okay. And that was, yeah. Sorry, go ahead. Yeah. I just wanted to understand that. Yeah. So that's the, we shut down the hardware division, which was absolutely the right thing to do for the good of the company. I like to build hardware.
00:42:54
Speaker
And I wanted to continue doing that. So the normal course would have been, I would have been the head of engineering, taken care of the software. Unfortunately, I am not a software guy. I still wanted to be, and I didn't want to be a burden. I said, you know, I'll help whatever is needed. I continued to be on the board. I was a board member till the last day. I had to sign up on the very last day.
00:43:23
Speaker
So, I left and I wanted to start something else. And that's when- Why did you say that shutting down hardware was the right decision for the company? So, two reasons. One is that we did not have the volume to sustain a hardware business. So, there needs to be a certain minimum amount of volume. Since post demo we had a volume, we were shipping like 30,000 units a month.
00:43:51
Speaker
That is a kind of volume unit. And then it came down to much smaller volumes because that's the size of the Indian market. So we cannot sustain a hardware business. And that is a problem that continues to be plaguing the fine print tech industry today. And that's why nobody is, so we ship about, at the peak we ship a few million devices a year as a country. And right now it's down to like half a million devices.
00:44:20
Speaker
or less per year, which is not enough to sustain a hardware business. We need millions of devices. So that was the main reason. I use that Soundbox device for these ships more than the PoS device.
00:44:37
Speaker
pass machines, yeah, yeah, yeah. And so that is the main reason I left EasyTap. And I continue to be involved, I still, EasyTap was in HSR, I live in HSR, I used to go there quite often to take care of all the loose ends. And then I took a small break figuring out
00:45:02
Speaker
what to do, the next big opportunity. So going back to the same theory that there is one large opportunity every decade, it might be region specific or it might be worldwide.
00:45:18
Speaker
There were, I think, two large opportunities we looked at. Let's say we spoke to a lot of people, including Sanjay, Biaash, and Satish, and figuring out what to do. One is medical. We're all getting old, and a lot of people are getting old in this world, and that's a huge opportunity. We wanted to do something that is governed by a lot of regulations, and so we did not want to enter there.
00:45:45
Speaker
The energy was a big opportunity. So there is a huge energy transition happening in this world. We are moving away from
00:45:56
Speaker
hydrocarbons to electrons for our energy. And that is mainly because I know there are at least half the people in this world who don't believe in what we say, which is that we have screwed up the climate very badly. We need to do something about it. And one of the ways we change our source of energy, which is mainly hydrocarbons today, which leads to carbon emissions and a bunch of other things.
00:46:25
Speaker
So that transition is happening, and it is a multi-decadal opportunity. And for countries like India, which does not have a hydrocarbon source, I think this is a God-given moment to lead the transition.
00:46:43
Speaker
And that is a larger picture we looked at, and then we'll delve a little bit deeper. In the electric future, there is energy generation, there is solar, wind, and nuclear also. Nuclear is also green, according to me, but in a slightly debatable topic. Then there is storage, which is battery technology. Then there is the consumption, which is either the heating or the motor.
00:47:12
Speaker
So we looked at all the various sectors. Battery, I still think, is a billion dollar business. We need a large amount of capital to build and sustain a battery business. Solar and wind, I think they're fairly mature now.
00:47:32
Speaker
there is not much innovation that can happen again it is capital driven and we will see a lot more deployments happen in this world in the next two decades. Then we looked at the consumption part which is the motor so motors will be the new
00:47:52
Speaker
engines of the future electric economy. That is where we saw that motors are either grossly inefficient, the induction motors, they're about 60 to 70 percent efficient. That means a third of the energy we put in is wasted at heat, which is not sustainable either economically or environmentally. Just like we moved away from incansant lamps to LED lamps, the same transition will happen in motors. It's already happening and it will happen in a much bigger way.
00:48:22
Speaker
The effect will be much larger. 10% of the electrical energy we produce on this planet is consumed by lighting. 60% is consumed by motors. So moving the efficiency of the motor has a much larger impact on the ecosystem. And of course, it's a huge business opportunity to have it too. So which is point number one. Point number two is there are efficient motors today.
00:48:46
Speaker
they all have the same property which is that they need a powerful magnet to get the deficiency out. These are usually the neodymium ferrous boron magnets or sometimes samarium cobalt magnets. The common thing about these magnets is they need this rare earth minerals to make the magnetic.
00:49:05
Speaker
So rare earth minerals here are this 17 elements on the periodic table, which are on the bottom of the periodic table, standing separate. They go by the name of neodymium, dysplosium, samarium. They are critical for our electric future. They're used in batteries. They're used in motors. They're used in displays. They're used in defense equipment. And so they're critical for our electric future. But they do have a few problems.
00:49:32
Speaker
Number one is they are expensive. Number two is they are difficult to mine and extract. So these materials are called rare earths not because they are rare, you know, gold and silver and titanium are rare. These are rare because the amount of minerals in a ton of ore is very small. As an example, if you take one ton of iron ore, you get about 600 kgs of iron ore, 60%.
00:49:56
Speaker
In the case of rare earth, it's less than a fraction of a percent. We get like 500 milligrams for one ton of ore. That means you need a lot of ore to get a few kgs of minerals out. That means you do a lot more damage to the mother earth and also spend a lot more energy and generate a lot more waste in extracting this. So the mining and extraction is just not sustainable. And the waste products are radioactive.
00:50:23
Speaker
So, that is the second problem. Waste product of the mining process is radio. The extraction process. Okay, how are these elements extracted?
00:50:36
Speaker
So the yeah that is the difficult part the various rare elements normally occur together this neodymium and dysplosium and subarium because they are similar you know electric what is that number of electrons and number of protons in that nucleus right they are all different
00:50:56
Speaker
They are all similar chemically. So that is why extracting them is extremely hard. So we have to use a lot more chemicals, a lot more water to separate them out successfully. So that is why the difficulty in the extraction comes in.
00:51:17
Speaker
The radioactive minerals like uranium also fall into the same gap. So when we extract them out, there's a very small amount of radioactive. They're not useful for either generating energy or building a nuclear weapon. But they're still radioactive. So the waste is a huge radioactive concentration. In China, there are what we call as cancer villages, where they extract these rare earth minerals out.
00:51:46
Speaker
So there's one more related problem. So there is something called surface mining, something called deep mining. Deep mining is very good dig deep into the earth for digging for coal or iron or aluminum or copper. This rare earth ore is appearing only in the top 20 meters of the crust of the earth. That means we have to destroy a lot more of the surface of the planet to get the ore out.
00:52:13
Speaker
There are people who are predicting that it will take another couple of decades to start the deep mining of errors. It's still a couple of decades of it. So that is the second problem. The third problem is these generally do have some temperature issues. You can't go beyond 150 degrees Celsius before they start acting weird, before they start acting demagnetized in the magnets.
00:52:39
Speaker
And the last one is our friendly neighbor has 90% control over the supply chain, which is a problem for everybody in the world. In terms of supply chain dependencies, in terms of cost variations, and of course, geopolitics. There is a very nice blog written by one of our investors. Many of the wars over the past,
00:53:08
Speaker
several thousand years have been fought over minerals, you know, gold, water, and water is also a mineral kind of iron, aluminum. And so it's classic geopolitics. Oil, of course, you know, all the forests that are being fought because of oil. And so rare earths will be the next geopolitics kind of the
00:53:29
Speaker
area where a lot of people are paying attention to. So we wanted to solve this problem and so we looked at various technologies. There is a technology called reluctance motors which
00:53:46
Speaker
which is like 200 years old, the original paper, but nobody had built it because of a bunch of engineering problems, non-linearity, thought ripple noise. And now was it time to solve it, primarily by applying more software, applying more algorithms.
00:54:03
Speaker
Like lot of things in the past three decades from the 90s, right? Lot of things have been taken over by software. And so basically the same trend is happening in motors. So this is a software controlled motor we are building.
00:54:19
Speaker
As you know, I hate to say this, but it is true. As Indians, we are better in software than hardware. So, you know, here is an opportunity to prove it. A software controlled motor. And that's what we have. And that's the opportunity we looked at. We started in
00:54:38
Speaker
Late 2019, at that time we were not aware the pandemic was kind of spreading in this planet. We started that time. We told the same story. We have not changed our story even by a word. We have told the same thing, greater problem, energy transition. At that time there were not many. I just want to ask you to pause a bit here while I recap.
00:55:00
Speaker
So what you're saying is that when it comes to expenditure of energy, which is either motors or heating, and in that motors is the area you're focusing on. Motors are of two types. There is the legacy motor, which is an induction motor. And then there are new age motors, which use rare earth magnets in them.
00:55:27
Speaker
The legacy motors are called induction motors. What are these rare earth magnet motors called? So, they usually go by the name of BLDC or PMSM motors. Okay. Okay. Okay. And these motors have rare earth. So, therefore, neither of these two solutions is good. The legacy motors are inefficient.
00:55:47
Speaker
energy wastage happening there and the new age efficient motors need their earth which again by itself is a challenge. What is the like you know at if you would just like kind of simplify what is the technology which runs an induction motor what is the technology which powers the new age BNDC motor
00:56:12
Speaker
and then what is a reluctance reluctance reluctant what is its reluctance okay and then what is a motor so if you can break that down a little bit.
00:56:25
Speaker
Sure. So in the induction, in all motors, there is something called a stator with windings on it, copper wire, which generates the magnetic flux. And there is a rotor which rotates, which generates the torque, which drives all our equipments, all our applications.
00:56:44
Speaker
In the induction motor, we generate the flux and that will actually induce currents on the rotor. So there are this what we call as corral cages, either copper or aluminum. It induces the currents and the flux and the current interact and create the torque. What is flux?
00:57:08
Speaker
So flux is the, yeah, sure, no problem. So flux is the, you know, if you look at the magnet picture, you have a magnet and there are these lines coming out, right? And that's the arrows. Yes, the arrows, the electromagnetic flux. So the electromagnetic flux induces a current in the rotor. The rotor, it has its own flux, the two fluxes interact and generate the torque.
00:57:31
Speaker
And it works very well, has worked for about 100 years or so. Fairly lossy, but it has no rare earth dependency. It's just made of aluminum, steel and copper. But the problem is the efficiency. The motor in a vehicle with what is typically called as ice, that is not an induction motor. That's another type of motor. The ice engine. No, ice engine is a petrol motor.
00:57:58
Speaker
Okay that is an internal combustion which is another type.
00:58:04
Speaker
Yeah, the energy is derived by burning hydrocarbon. And there is an explosion which moves the piston. Yes. Yeah, it just controlled explosion. Yeah. Okay. Nothing to do with electricity. Electricity never enters there. So, that is the induction motor. Then we have the permanent magnet based motors BLDC and PMSM. So, there instead of inducing the current on the rotor, we now have the magnet.
00:58:32
Speaker
And the magnet has the flux. And so they interact directly with the flux of the stator and generate the torque. And that's where the efficiency kicks in. Instead of doing that conversion, now the magnet directly does this. And that is where they're very efficient, generates a lot of torque. The power density is good.
00:58:53
Speaker
Every electric vehicle from the smallest e-bike, to our YULU, to Ether, to Nexon, to Tesla, they all have the same motor. The BLDC or a PMS motor. Just some are bigger. I want to understand a little bit more basic technology. You said there is a wastage in the induction motor because the current is converted into flux.
00:59:22
Speaker
Yes, so the stator is where you feed the input, the input current and that induces the current in the rotor and that creates a flux, the two fluxes interact and generate the torque.
00:59:37
Speaker
So that causes magnetism. Exactly. Yeah. Yeah. One way to think of this, which is actually correct is if you think of those lines as rubber bands, right? They have tension, they have energy in them. When they interact, you get the talk, you get the energy and that's converted into a rotation.
00:59:55
Speaker
In the case of BLDC or PMSA motors, the conversion is not there. The magnets itself generate the flux. So it works really well. The more powerful the magnet, the more powerful are these rubber bands. The lines which you normally see. The more powerful the rubber band is, the more torque you get. The more force you get, and that gets converted to torque.
01:00:19
Speaker
So, what I am also assuming is in a BLDC motor, like a less powerful than a more powerful motor, the difference in weight would not be very high, I am assuming. Exactly. Because you just need a more powerful magnet, you don't necessarily need to bulk up the motor a lot more to get more power. Exactly, that is where their advantage comes, what they call as power density, right, which is a weight per kilowatt.
01:00:42
Speaker
So, that's why they're very good. They're used in vehicles, they're used in drones. Yeah, those are the big applications where efficiency is critical because they have a battery. And BNDC motors or PMSM motors, they are manufactured in India also.
01:01:00
Speaker
So they are manufactured in India today, locally, but most of these BLDC and PMSM motors need a controller to drive the motor. We have to rotate the flux. So basically you rotate the flux and these magnets are trying to catch up and that's how the torque is generated. So they need a controller.
01:01:30
Speaker
As a general rule, as a country, we have not designed motors and controllers. We have started manufacturing them, only the motors, the controllers are still primarily coming from outside. Or locally manufactured by the large MNCs, like Dana and Magna and...
01:01:51
Speaker
Malay and all that. The older companies like Kirlosker and Cummins, they still do the induction motors. They're still used. I mean, all these motors are still used, induction motors and buildings. That is the second reason why we started this company. As we are going through this transition and transitions are
01:02:17
Speaker
opportunity to do something new to change the status quo and all that. We said we have to design the motor and the controller and manufacture it in India. While doing this, we also eliminate the critical mineral dependency on foreign sources. So we wanted to build the Bharat motor in some sense. And that is the second driving factor for us.
01:02:45
Speaker
The third one is my pet peeve which you heard before a few minutes ago which is made in India and now we've expanded it made in India for the world because now this problem is acutely felt by everybody in the world. There is not only the critical mineral dependency it's also very damaging to the environment the manufacturing that's why
01:03:09
Speaker
European continent which is a little bit more sensitive to these issues is more interested in doing this. There are about half a dozen companies now all over the world trying to solve this problem. It's not only us. We believe that we are far ahead of the other companies.
01:03:35
Speaker
When we deploy this motor, right now, we are at a stage where we have about a dozen paying customers that are doing the initial testing and trials, and some of them will scale up quickly when this gets deployed in large numbers. And for us, large numbers initially is about a few thousand motors this year in a few applications. This will not only be the first of its kind in India, it will be the first of its kind in the world.
01:04:03
Speaker
That's what we wanted to do. It goes back to the question by the investor. Why is it not being done outside India? People are trying, but we want to be at the forefront.
01:04:17
Speaker
Okay. I want to go back a little bit. So you said BLDC motors are made in India, but controllers are not. These BLDC motors which are made in India are still importing the magnets, right? Because the magnet is made up. Exactly. So there is correct. That is the problem. The remaining aluminum, steel, and copper, we are good as a country. The magnets are still coming from our neighboring country, from China. But there is a problem there. If you go and
01:04:47
Speaker
by the magnets from China you get it at a certain price. But if you go and buy the motor from China it comes at a much cheaper price.
01:04:57
Speaker
Yeah, okay, okay. Oh, yeah, they're doing that price game. They're doing that price game. Very, very clear. Very clear. So they are basically telling that don't manufacture, I'll manufacture it for you. Of course, they have the scale. I mean, there's nothing wrong with what they're doing. They have massive scale. I don't know, there are many definitions of
01:05:19
Speaker
China, we call it state-sponsored capitalism. It is capitalism, but the state controls it. So they have done it well. And that is why energy is critical for any society, right? Like patrol. And we are suffering today. I don't know how many hundreds of crores we pay every day to run this country buying patrol.
01:05:45
Speaker
When we're going to the electric future, we'll end up doing the same thing. We'll be dependent on batteries for foreign sources, critical materials on foreign sources, semiconductors as you know, we are still dependent. I always like to say this, if you look at this thing, smartphone, everybody has seen, and we claim that we are locally manufacturing it here.
01:06:15
Speaker
But do we know how many of the components are manufactured inside India? Whether it's a display done? Exactly. I mean, there's nothing wrong with it. We have taken the first step. The display, the battery, the semiconductors, they're all coming from outside. And why worry is the same thing will happen in the EV, right?
01:06:36
Speaker
the core power train will be coming from outside. I'm drawing a dome state picture, but when I look at this, the dome state is here. But we want to fix this. I know the government, its various levels are fixing, is fixing it. For the first time, I think the foundation stone or the inauguration was done.
01:07:00
Speaker
for the semiconductor plant at Dholera in Gujarat, which is a good sign by Tata's. Batteries, I think there is a push to manufacture it. There are a lot of people investing it. And we want to solve one part of the problem. Batteries also depend on lithium. But I think, again, India doesn't have much of a lithium reserve. No.
01:07:24
Speaker
So it's not only the materials. Even if you have the materials, we don't have the technology to process it. So that is why when these news items came, lithium was found in anthroboros, lithium was found in cast. We are all laughing like good. We are at least 10 years away using that ore. So the technology and the know-how and the processes to take the ore and convert it into an application as we call it, the magnets.
01:07:49
Speaker
We are nowhere. I mean, I can, I can do a very bad example, like Silicon, right? We have sand everywhere, but we can't make chips. Oh, same thing. Why is the controllers, why are controllers not made in India? Controllers is basically just an embedded software on a chip, right? And India has the software chops.
01:08:15
Speaker
So, the controller is a fairly complex piece of equipment you know which drives this motor a lot of high speed algorithms and in our case more high speed algorithms have to be run because of our reluctance motor. One question first why does BLDC need a complex algorithms, why does a BLDC motor need complex algorithms?
01:08:35
Speaker
So basically, the way the BLDC or the PMS motor works is that the magnets are there on the rotor. You shift the field so that the magnet tries to catch it. You shift the field magnet tries to catch it in its operating principle, but you have to keep shifting the field and that's why we need it.
01:08:53
Speaker
Okay. The controller is getting real time information of where the field is and it just needs to move at what pace it needs to move. And it probably needs to incorporate some user input. Like if, if it's the daughter and the change the speed of the fan, then it should. Exactly. That is why we need that. And the difficult part there is you're switching hundreds of amps of current every few microseconds or hundreds of microseconds.
01:09:23
Speaker
And that is kind of hard to design. We just, it is not rocket science to be clear. It is just that we have not tried to do that.
01:09:35
Speaker
we don't have the engineering prowess to do that. That is why all these things are imported today. That is the problem we wanted to solve. We said, well, we'll have to do this from scratch. My favorite another example is not exactly valid, but still fairly valid. We have this thing called jet engines. As a country, we still don't have a jet engine.
01:10:02
Speaker
Yeah, you know that, right? I know jet engine is a much more complex piece of equipment, but same thing, because we have not invested. It's just we have not paid attention. We have not trained our people to do that. And that is why I hate to use this word, we go begging to South France or General Electric of USFA saying that we need the jet engines to power our fighters.
01:10:31
Speaker
As a society, we have stayed away from core engineering. We have stuck to the applications.
01:10:41
Speaker
to the services, we've done a very good job. There is no doubt about it. Core engineering like motor control, jet engines, engine design, gear design, we are still way behind. We're still way behind. Many reasons, we were a poorer country, much better now. We had other problems like eating and putting a roof over.
01:11:07
Speaker
I think now we are going to the next stage and that is a large trend, right? There is another subtle thing that is happening for a company to succeed, it needs an initial market. I think that is the reason US always succeeded. There is a large market there. Now India has a market, you know this, depending on whom you speak, there are
01:11:30
Speaker
either 60 million households or 100 million households who are considered middle class who can actually afford their smartphones and EVs and whatever other e-commerce and other things. I think it's big enough to
01:11:45
Speaker
support companies like ours. Once we deploy it here, then our hope is to deploy it outside the country, which was not the case before. If you go back two decades, we're still struggling. I think that is one more trend that has happened. VRS, one of the single largest markets in the planet.
01:12:10
Speaker
By the way, this was identified by Chamath, full of marks to him. He said, there are two single largest markets in the world today, lucrative markets. There is US, North America, there is Europe. The rest is all screwed up, either it's small or they're fighting wars or whatnot.
01:12:29
Speaker
He said India is the single largest market and that is the big potential. And I think that is being shown in various industries now, whether it's insurance, medical, electric vehicles, smartphones. I think that is also a large term trend. We are tapping it.
01:12:47
Speaker
Sir, help me understand what is the technology behind a reluctance motor. Ah, yes. So reluctance motors are so hard. You said that the concept existed more than a century back, but it's still not neglected. So why? So reluctance motors are a little bit different. Again, the same stator, it generates a flux and of course, if you switch it, it will switch.
01:13:09
Speaker
Now the rotor is actually extremely simple. The flux moves from the top and goes through the rotor and go to the bottom.
01:13:20
Speaker
like again, slightly different analogy, these lines are like water flowing. The water always finds the least resistance path, any liquid, right? Least resistance path. So the rotors are specifically shaped, if you take a cross section, to offer a least resistance path. So now the trick is to keep the rotor at the least resistance path. You move the stator field again,
01:13:49
Speaker
And now the flux wants to take the least resistance path and it says, oh, wait a minute, there is a hard resistance. What will it do? It will move the rotor. And that's how the torque is centered. So reluctance is the, actually the reluctance of the flux to go. I mean, nobody wants to move, right? Including flux.
01:14:05
Speaker
We all want to be in a state of rest, or we want to take the least resistance part. The flux is doing the same thing, and that's how the torque is generated. In principle, that's what it is. So now I'll explain the three motors, the three big motor technologies. The problem with the reluctance motors, and the two kinds, there's something called switched reluctance motors, there's something called synchronous reluctance motors. Even though the principle is simple,
01:14:35
Speaker
It's just this reluctance path is highly non-linear as it moves it changes. So we have to compensate for it at a much higher rate.
01:14:50
Speaker
And we have to monitor a lot more parameters in the motor to run the algorithms, again to set back the current. So any motor, the end result is the same. I want to set what is the current in the stator at any instant of time. So we do it at a much higher rate. It's called a switching frequency. We are switching at tens of kilohertz as opposed to kilohertz in the existing
01:15:18
Speaker
so we have like one order of magnitude higher. We also have better algorithms, more complicated algorithms to match all these things and to make the motor run smoothly. If I don't, the jerkiness will be there and that's where the non-linearity, the torque ripple and the noise, all those things kick in. And that is what we have solved.
01:15:42
Speaker
And the last thing I want to add is, because software is a larger component, the motor is simple, the hardware is straightforward, over time, we will become better. The software, we'll start making out that last half percent, one percent performance out of the machine.
01:16:05
Speaker
So, you said an induction motor is very lossy. So, which means that it has some like maybe 60 percent efficiency or some such number. What is that number? How does it change from induction to reluctance? So, I will take one step back. Induction motors are about let us say 70 percent plus or minus 10 percent depending on the motor.
01:16:29
Speaker
the permanent magnet based machines. 30% of the energy is lost as heat. Yes, one third of the energy is lost. That is the bad part, which is not sustainable. Then we have the permanent magnet based motors, BLDC or BMSM motors. Those are about 90 to 93% efficient, 94%.
01:16:53
Speaker
Our motors are at the same efficiency. We never ever claim that we are more efficient than the BLDC or the PMSM motors, because we just can't beat the flux of the magnet, but we match the efficiency of the BLDC. So which is, to answer your question, we are in the low 90s, depending on the motor size. The larger the motors, the more efficient they are, without the use of the rare earth magnets.
01:17:23
Speaker
Well, and what do you mean when you say it is a non-linear thing? You're talking of how the algorithms. Yes. What does that non-linear word mean here? Correct. So, when you look at the controller code for the for the BLDC motor or the PMSM motor, usually the behavior of the rotor is defined by mathematical equations.
01:17:47
Speaker
Which means it's a linear system. Math usually deals with linear systems. Equal amounts of input give you equal amounts of output. The conversion function, the effects will have to model it. So basically most software, that's what they do. They are processing effects. They take X, the process effects give you Y. Which means just more compute, more deterministic and all that. Irrespective of the position of the rotor.
01:18:14
Speaker
In the case of the reluctance machine, we do not have mathematical equations that govern the generation of torque and we can do that only for a certain instance of the rotor position.
01:18:33
Speaker
and for a certain amount of current, which is certain amount of power and torque. So that's why whether depending on the torque, depending on the current, depending on the position, we have to recompute everything and set the current points in this one. And so I cannot say that I run the same equations when the rotor moves by one degree, I cannot. So I have to go back and look at everything.
01:19:02
Speaker
And we also learned what the motor did like one instant ago, what the motor
01:19:12
Speaker
will do in the next instant. And so we can compensate for that also. We have to compensate for that. Because there is always memory in the motor, right? It's just not, what I'm doing now is dependent on what I did before, right? It's a rotating machine. So that's why it's a lot more complex. It sounds like the three-body problem. Three-body problem, yeah. Yeah, that's true.
01:19:39
Speaker
It's just complex. We took several, almost a couple of years to get it right. But the good thing with this is we have to get it only once right. And we can apply it to all motors. And that becomes our intellectual property. And we can make it better over time.
01:20:04
Speaker
Okay, okay, I understand. What is, so your motors are now production ready? Like, you have to tell? Yeah, well, in our journey, we started about four and a half years ago, at the end of 2019. We have developed the motors, you know, it took a while. And that is one of the hallmarks of inventing something new, what we usually call as deep tech.
01:20:31
Speaker
It takes about five years. And in some areas like nuclear, it takes decades. But in case of technology, it takes about five years. We are at that juncture now. We have developed motors for two-wheelers, three-wheelers, small four-wheelers, and an industrial motor. We want to address all this segment. We have manufactured the motors. We have about one dozen customers, and more are coming in.
01:21:00
Speaker
who have placed the initial purchase orders to buy these motors and start testing. And the scaling of both manufacturing and deployment will happen in the latter part of this year.
01:21:13
Speaker
How, you said you've deployed certain motors, how have you manufactured them so far? Like contract manufacturing. So, no, we, so we have manufactured on our own. So another, sorry, it's like digression, but related to this question is when we started the company, we wanted to be like arm, actually our original arm company. Okay. Yeah. Arm only designs chips. So we wanted to be a design licensing company. Actually our own, one of the original,
01:21:43
Speaker
versions of the deck says that we want to be the arm of motors. So we did that, we got couple of contracts, couple of customers, Tata LC, Bounds, Amberg and all that. But then when we started talking to other customers, we tell the same story and they say this is all good, but give me the motor. So that is when we said we have to enter the product line of business.
01:22:06
Speaker
So we started manufacturing our own motor. We have, we always had a small prototype shop where we manufactured this initial set of motors. We are now setting up a manufacturing plant in an industrial suburb called India, which is north of Bangalore, where we are setting up our own manufacturing plant, which will go online in the month of
01:22:36
Speaker
may start manufacturing motors in bulk, about a few hundred motors a month. So we have now kind of complete, come complete circle. We started with design, we wanted design IP licensing. We still do that though, if somebody comes and says, but now we have gone into manufacturing. And again, and in the future again,
01:23:04
Speaker
Once the volumes go up, at least the current thinking is that we will not scale up our manufacturing, then we'll go to contract manufacturing. The reason we did this was the reluctance motors were building as I told you is the first time in the world. So there is a lot of skepticism.
01:23:24
Speaker
by the customers and the contract manufacturers. They are like, we are a kid playing in the playground, they're watching us. And so we want to prove to the world, prove to everybody that look,
01:23:40
Speaker
this is the technology that works, we'll deploy. Then when I want to do that 10,000 motors per month, just 1,000 motors a week or whatever, that kind of numbers, then I can confidently go and talk to the large contract manufacturers from the usual areas like Coimbatore, Gujarat, which are big centers of motor manufacturing. So that's what we're doing.
01:24:08
Speaker
The other angle is there seems to be a little bit of support for manufacturing now in India. At a broader level another thing favorite theory of mine is that no country in this world has gone from
01:24:24
Speaker
lower income to higher income without going into manufacturing and product ownership. We have to take that path. I think people have realized that, and that is why there is a lot, apart from all other political geopolitics and other things. I think manufacturing uses control over technology, generates employment, and we own the product, which in the long term we believe
01:24:53
Speaker
we will get more revenue and more profits. So why I say this is we have now investors who are comfortable talking to us that we are a manufacturing entity, which was not the case like indicated. Yeah. Amazing. Motors are, you know, there's so many,
01:25:21
Speaker
shapes and sizes of motors, anything from a drone, which would use probably a very tiny motor to a fan, to a generator, maybe even in the dams, there are motors being used. So what is, I mean, it is such a white market. What are you focusing on? You must have had some prioritization.
01:25:42
Speaker
Yeah, so that is a problem in the motor industry. There's nothing like a standard motor. They come in all sizes and shapes and cost and other things. So we have to concentrate where we deliver value. So again, to be clear, our reluctance motor technology is not a solution for all applications.
01:26:05
Speaker
One of the drawbacks of reluctance motors is that because we don't use the magnets, we are a little bit heavier and bigger. You have to compensate for the flux by using more steel and copper, which contributes to like less than half a percent of the overall weight. Now, so whatever application is sitting on Mother Earth, like EVs and industrial motors, they don't care. But whatever is airborne, like drones you mentioned, we are not a good fit.
01:26:36
Speaker
Every quarter everybody knows in this company every quarter a company comes and says you know build this motor for us and we'll politely say no you know we are hungry but you know we cannot eat whatever is out there. So it is not applicable there. We are also not cost and performance effective for smaller motors.
01:27:00
Speaker
Like a fan? How do you define this? Like a fan. Yeah, like a fan. So we need at least like about 2 kilowatts, which is 3 HP for our technology to become cost and performance effective. So that is why we have stuck to
01:27:20
Speaker
traction motors, which is EV, and industrial motors, which are large, which works out well for us because the larger motors consume most of the power on this planet. So we first have to fix that. This is our current state of technology. We are a tech-driven company.
01:27:38
Speaker
We will continue to innovate. And I'm pretty sure Maha and Ravi, our co-founders and the rest of the team, will figure out a way to build motors that are lighter and also cost competitive in the smaller motors. We know how to do it. The steel has to be made in a certain grade. So once we achieve a certain scale,
01:28:02
Speaker
both in terms of business and shipping, and of course capital. We will do more R&B in these areas. We will have to do, otherwise somebody will come and catch up with us.
01:28:19
Speaker
Your role as a leader, do you get into the weeds and understand the technology and contribute there? Or do you find the best people for each kind of work and empower them? What is your leadership style?
01:28:35
Speaker
Yeah, so when we started, there were three of us, myself, Ravi, and Maha. One of the problems with motor technology is wide spectrum of disciplines. Electromagnetics, mechanicals, thermals, power electronics, and software. So I'm more of a hardware and embedded software guy. Maha is our power electronics guru. Ravi is our electromagnetics and mechanical guru.
01:28:57
Speaker
The very first motors we built was built by our hands. So we built the motor, we did the hardware, I wrote the code, and we built the motors, we raised money, we built the team, and all that. Even now, all the three of us know exactly to the last detail about the technology.
01:29:23
Speaker
But I have stopped writing code. Our firmware lead gently pushed me away three years ago, saying that you stay away, your code is bad. No, he didn't say that. So I no longer write code, but I review code. Same with Maha. He no longer designs hardware. He no longer solders the hardware.
01:29:44
Speaker
but we continuously review to the last detail. Same with Ravi. Ravi is just, if you saw, we have kind of evolved from actually building to more managing, but we are still technologists at heart. Yeah. Like most tech companies.
01:30:08
Speaker
We are 75 people, 60 of them are engineering, 15 are in manufacturing now, in prototype and larger manufacturing. We still don't have a well-structured sales organization. All of us still sell through our contacts, through LinkedIn and all of that. We are building the sales organization now.
01:30:38
Speaker
as we scale up our technology. Yeah, that's where we
Funding and Revenue Strategies
01:30:45
Speaker
are. How have you funded this? Because as far as I can see online, you raised, I think this was seven crores till date.
01:30:56
Speaker
No, a little bit more. So we started in 2019, then the pandemic hit us. Then in 2020, we got a grant from the famed Indian Institute of Science. It was a small grant, but we built the very first motor on that one. We learned a lot of things. In 21, we raised seed capital from Kalari and IIMA Ventures. We raised 6.5 crores that time.
01:31:25
Speaker
In 22 and 23 Jan, which is about 14 months ago, we closed our CDC around which was about 4.8 million dollars for 38.5 close. Also, one of the bad things about Deep Tech is it needs a lot of
01:31:47
Speaker
Patient capital. Yeah, and patient capital. Both. So our revenues are mostly from design. We have some design contracts. I mentioned from Amber, Bounst, ILC, and a couple of other large companies. So we have a few crores of revenue per
01:32:07
Speaker
per year now, but we will switch to our double digit course from next financial year. And once you start shipping our motors. All right. Okay. I understand. Amazing. Amazing. And let me end with this.
Entrepreneurial Advice and Communication Skills
01:32:24
Speaker
You know, what's your advice to young founders, someone who's just about thinking of starting up? Yeah.
01:32:34
Speaker
Yeah, so I'll tell you all the bad things first. This is what I tell people whenever I get a chance to tell. You need a stomach with concrete lining and a heart with steel in it. Entrepreneurship is very hard. One of the hardest things to build a business. But it is one of the, I believe, the most satisfying things you can do in life.
01:33:04
Speaker
For the following reasons, you actually generate employment, they build a product, you deliver value to the customers, and hopefully you also make money in this one. So that is number one. Number two is never ever have money as your end goal. It will just lead to distortions in your thinking.
01:33:25
Speaker
I'm not talking about fraud. Fraud is one distortion. It just leads to a lot of sub-optimal decisions. You've got to have another goal. Like, you know, my goal is made in India. I build a product from scratch and deploy it all over the world. You know, that kind of thing.
01:33:46
Speaker
And the last thing I believe is patience and perseverance is severely underrated in the entrepreneurial world. It's like always fast in this one. That's not true. It is always patience, focus, and resilience that
01:34:05
Speaker
makes a company successful. Just sheer hard work doing the same thing again and again building a product and this one. And one more thing is it's very valid for people like me. I did my engineering and I never had a business background. I never sold anything in my whole life. In Intel you don't sell. People come and buy the chips.
01:34:31
Speaker
And I'd say even China would eventually be like that, I'm guessing, like you would not need to sell if it's a truly disruptive product, people will line up to buy. So actually, I'll come back to that in a moment. So if anything, learn one thing, learn the art of selling. If I ever had a chance to go back to college, build a time machine and go back to college, I would go back to
01:35:00
Speaker
and learn how to speak, how to write, and all of that. And coming back to what you said, most of our customers have been inbound. And this is the classic externality, right? The change is happening. Everybody's worried. China is becoming more belligerent. Everybody's worried about this rare earth. And they come to the door because of that. They send an email, or literally physically come to the door.
01:35:24
Speaker
We still have the same conversion ratio, 10 people come and one person finally signs up and all that. So there's always one externality that gives us this one. I think those are the few things I always tell to people, don't worry about capital. A lot of people think that capital is scarce. It is in some sense.
01:35:48
Speaker
but you should talk to the VCs. They are looking for good companies to invest. It's just like when somebody says, am I unemployed? I always say you're probably unemployable. So, no, that's true. That is true, right? I mean, we're always looking for good people, right? I'm pretty sure you were also looking for good. Same thing with companies. The capital always flows to the right business.
01:36:14
Speaker
And this happened over hundreds of centuries. So that's one more thing. Amazing. Thank you so much for your time, Bhakta. It was a real pleasure.
01:36:24
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 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.