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The story of India’s First YC-Funded SaaS Startup | Srivatsan Chari (Clear)
219 Plays3 years ago
"If the bet had not worked out, we would have died".
This was Clear's reality when it pivoted from a beloved consumer brand into enterprise software for the new GST regime. This single, high-stakes gamble reveals the conviction required to build a category-defining company, moving from a product people liked to a platform businesses couldn't live without.
Bio
Srivatsan Chari is the Co-founder of Clear (formerly ClearTax), the company that transformed financial software in India. A computer science engineer from BITS Pilani, he has been instrumental in building Clear into a fintech powerhouse that has served over 6 million income tax filers , supports more than 600,000 SMEs , and processes over $300 billion in B2B invoice value annually. Under his leadership, Clear was the first India-focused startup to be accepted into Y Combinator and has raised over $140 million from elite investors like Stripe, Sequoia Capital, and Founders Fund.
Key Insights from the Conversation:
- The "Unglamorous Problem" Advantage: Clear deliberately chose to solve the complex and "unglamorous" problem of Indian tax filing, a niche that larger competitors had ignored, turning it into a competitive advantage.
- The Great B2B Pivot: The company made a high-stakes, "bet the company" decision to pivot from a high-traction B2C tax product to a B2B enterprise SaaS platform with the launch of GST in 2017. This move now accounts for 85-90% of Clear's revenue.
- Bootstrapped Resilience: The founding team bootstrapped for three years, a period that forged extreme resilience and creativity. All early growth was organic, driven by content, SEO, and word-of-mouth, a DNA that remains core to the company.
- Founder's Philosophy: Build & Sell: A key lesson from Srivatsan's earlier, failed startups was that a founder must be involved in both building the product and selling it, embracing all facets of the business from customer support to marketing.
- The Financial OS Vision: Clear's ambition extends beyond taxes to building a connected "Financial Operating System" for businesses, using acquisitions and technology to unify invoicing, payments, compliance, and credit on a single platform.
- Forward-Thinking Regulation: The Indian government's decision to provide APIs for tax filing and implement a forward-looking, digital-first GST system was a critical enabler for Clear's success and scale.
Chapters:
(00:00) The Origin Story: Solving India's Tax Problem
(11:10) Early Days: Bootstrapping with a "Pay What You Want" Model
(17:14) The YC Catalyst: How Y Combinator Transformed The Company
(32:51) The "Bet the Company" Pivot to GST
(38:25) Why GST & E-invoicing are a Global Game-Changer
(45:51) The Challenge of Pricing & Selling Enterprise SaaS
(55:16) More Than Tax: The Story Behind Rebranding to "Clear"
(57:53) The Future: Building a Financial OS for Businesses
(1:01:52) Taking the Indian Playbook Global
(1:05:31) Clear's Monetization and Business Model Today
Hashtags:
#FounderThesis #SrivatsanChari #Clear #ClearTax #StartupIndia #Fintech #SaaS #B2BPivot #YCombinator #Entrepreneurship #VentureCapital #MakeInIndia #StartupStory #Bootstrapping #IndianStartups
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Transcript
Introduction and Sponsorship
00:00:00
Speaker
Before we start today's episode, I want to give a quick shout out to Zencaster, which is a podcaster's best friend. Trust me when I tell you this, Zencaster is like a Shopify for podcasters. It's all you need to get up and running as a podcaster. And the best thing about Zencaster is that you get so much stuff for free. If you are planning to check out the platform, then please show your support for the founder thesis podcast by using this link, zen.ai slash founder thesis.
00:00:27
Speaker
That's zen.ai slash founder thesis.
Meet Srivatsan, the Fintech Innovator
00:00:31
Speaker
Hey, I'm Srivatsan, founder of CLEAR, formerly Cleared Act.
00:00:46
Speaker
In every industry, there are the pioneers, the trailblazers who do so many firsts that they inspire another generation of founders behind them to dare to dream. And at the fintech SaaS space, that trailblazer is undoubtedly clear tax, which is now rebranded to just clear.
00:01:04
Speaker
Clear was founded in 2011 in an era where the news of startups like Flipkart getting funding had just started trickling in. But no one seriously considered giving up stable jobs to become founders. Clear was so early in the game that there were no playbooks that would help them figure out things like pricing, go-to-market, growth hacking and many other essentials of scaling up.
00:01:25
Speaker
They were among the first India-focused start-ups to get into the Y Combinator program in 2014, followed by Blockbuster fund raises of $50 million in 2018 and $75 million in 2021 from global payments company Stripe.
CLEAR's Early Challenges and Innovations
00:01:40
Speaker
In this episode of the Founder Thesis Podcast, listen to the story of how Clear made history so many times with its co-founder Srivatsan Chary, who tells Akshay Dutt about the fascinating journey from a house in West Delhi to its swanky corporate offices in Bangalore today.
00:01:56
Speaker
So I think Arjit's dad runs a CFI. So Arjit's always seen that side of the world. He's seen how difficult taxes were, how pen and paper things were, and still continue to be. It's still crazy. And tools that are there for filing taxes or doing compliance, just to get access, managing your money.
00:02:24
Speaker
they're so archaic, they're stuck in, they were made in the 80s and they're still stuck there. So I think that was a big motivating factor. Like, so Ashutoshin started with building desktop software, which he distributed to CAAs, right on a CD back in those days, because that was the sort of thinking out there, like, web apps still weren't so mainstream, especially for something like as complex as taxes. And then he realized, okay,
00:02:50
Speaker
Maybe this can be solved online, right? And he built the first version of ClearTechs on the web. He's a systems engineer, so wasn't completely familiar with the frontend, though he like wrote the first frontend himself. And that's what it'd been me and our kids. We had been a little bit, so we started getting our hands dirty a little bit here and there as well. Not as consulting, but just because this was something we truly believed in, like just helping a fellow person in the startup community, right? The first version of ClearTechs had launched the first year.
00:03:19
Speaker
and got me, I think, a few thousands of filings and all of that. And so that's when me and... Like his thesis was that there would be a certain type of income tax filer who, if given some amount of workflow tools, can do self-filing. Yes. It wasn't a thesis, but it was like, hey, if I had to do this, what would I do? If I had to file my tax returns, and I think that's, funnily, that's been one of our
00:03:49
Speaker
thesis on building products. Really figure out the need yourself. If this was your job, or if you had to do this yourself, how would you want to do it? What would be the best experience that you could create for yourself when you made something?
00:04:07
Speaker
I think it really came from that place because it was painful. It would take you days sometimes dealing with so much pen and paper and extends and very shitty Java utility and all of that. But come online, if you could just upload your Form 16, which is a document that every company gave you, that document has all of your data.
00:04:32
Speaker
what if you could automatically read that and pre-fill the tax editor, go through it, add a couple of details which the form doesn't have, and then press a button and file. If you have said they're done, you have to obviously take all of those hundreds of tax logon, thousands of tax, tens of thousands of tax logs and encode them into software, so pretty painful. But if you did that, I think one of the interesting things about me, Archesh and Ankit,
00:04:58
Speaker
With respect to software and technology, I think we're very happy to just jump head first and undriven problems. I'm not afraid of reading Harry Potter. Tax is one of the problems, like the most comfortable, like logic and workflow problems, right? So I think it was just that, like what would we like to see? And I think at some finances and especially taxes, right? Like a lot of finances, transactions, but taxes are one of those things which are, it's like a puzzle.
00:05:28
Speaker
Right? Like you are dealing with, because taxes truly are very, very interesting. It's just lots of logic stacked on top of logic and all of that logic has history, right? Like the second who did something which was looked at as not good by the government. So you put a law around it and you try to make money on it. There's a loophole that they find on that and you add a few more riders. Right?
00:05:52
Speaker
When you read tax law, it just tells you this very interesting story of the economy, finances, and how things evolved in the country. So really, really cool stuff. And it was a puzzle, right? So you're reading all of this, and you're like, okay, now I just have to write code, I have to write technology around that. And build a front-end, build a design experience that really simplifies that, abstracts all of this complexity away, won't let people think about it.
00:06:21
Speaker
That was really, how can you use, we genuinely believe in the power of software and technology to simplify people's financial lives. And how could you do that? That was really, I think the key thing. So we did that and it worked like some people discovered it. So I understand that.
00:06:43
Speaker
Tax law is essentially like a series of if-then statements which can be coded like if your income is this much then this is so like it's essentially just a whole bunch of if-then statements so you can easily code it into a tool and then you can easily code it. You can't use the word easily, but you can.
Collaborating with Government for Tax Solutions
00:07:01
Speaker
Yeah, you can code it, but was there the ability to file using clear tax like in terms of that integration with the government portal? Yeah, so.
00:07:13
Speaker
This is the interesting part, right? I think why a lot of people heap a lot of abuses on the government for voting matters is the income tax department actually was a little forward thinking at the time. They had API because they genuinely believed that, look, if taxes had to be digitized in the country, it wasn't completely
00:07:32
Speaker
It couldn't be completely left on them, right? You had to, I think, you had to support the ecosystem. You can't just say that, okay, like, like, you can go back to your apartment, do all of that. You had to provide APIs.
00:07:47
Speaker
two private players to actually help create software, returns, workflows, all of that, and enable them to find. It's not easy getting that license if you take care of a lot of things, because you deal with people's money, right? You could really screw people over without them realizing there's an insane amount of fraud that malicious people could do. And this is a place where people will blindly close their eyes and say, hey, I trust you, do whatever you want, right?
00:08:11
Speaker
It's not easy, but I think there's this person in the introduction of Mr. Ramesh Krishnamurthy, very forward thinking. He said, this is what the future is going to be. So they had APIs, not wasn't like, okay, APIs. It's not like today, right? That's like a modern API. And I think it's both done. No, no, it's a modern API, but I think things were just not that simple in those days, even from software deployment, all of that.
00:08:36
Speaker
But yes, they did exist. But that's been one of the interesting things about India. When you come to that later problem, GST and stuff is so forward-looking. UPI is so forward-looking. There are many things which are really interesting about finance and taxes in the country. So yeah, there were these APIs reconnected. We had to do an insane amount of validation because the API was very straightforward. The final return, I will take it.
00:09:06
Speaker
I'm not going to do validation or whatever. I'll just tell you whether it's correct or wrong. I can't tell you whether this part is wrong, this law is wrong. You have to be correct. Sometimes, just imagine this, right? Like you had some X income and let's say your taxes is whatever, Y. So I could easily say, hey, you know what? You have to actually pay 3Y and not Y. And you will take, you're saying you can pick that.
00:09:31
Speaker
So you could completely screw things up for people. It's very, very, very, this again, like the taxes that you pay are sometimes 30% of your income. So it goes in lakhs. It's not something you could take very casually. So yeah, it was like,
00:09:50
Speaker
There's a lot of anxiety and stuff, fighting with us. Shit, have we calculated this correctly? Is this law correct? Sometimes someone would come and say, hey, this is wrong. And then we'd be like, oh, shit, is it wrong? And then we look at it, and then we analyze it. We run a bunch of calculations. We do it on pen and paper. No, we're right. I have one point. Did you guys actually learn the tax code yourself? We did. We did.
00:10:19
Speaker
We had to, I mean, there's no escaping that. And I think that's another secret issue of the big products. You can't, like, you have to get into it. If you're building a product, whatever it is, you really have to build
00:10:35
Speaker
intuition, you have to build an act, you have to build a judgment for it. You can't half-ass it. You can't outsource thinking, especially core thinking of the product. You really need to get that yourself.
Monetization and Growth Strategies
00:10:47
Speaker
So that was how income tax finding worked in those days. And had that integration already happened, were people able to just click and file? Yes, yes.
00:10:58
Speaker
Okay. Yes. The first version was out and then we came in, built new forms. And what kind of traction was it having? Like what was the subscription to it and how many people? How many people? Everything was free. We were bootstrapped. We didn't have any funding or anything. We had a few thousand customers in the first year. We had like
00:11:22
Speaker
We had really interesting days of monetizing. And we tried different experiments. We tried something like, pay what you want. And just imagine, this is pay what you want in 2012. After you finish filing, you pay us whatever you feel like. You want to pay us 10 rupees. And that was interesting because you would always negotiate against yourself. Sometimes, you would always negotiate against yourself. But you would realize that
00:11:48
Speaker
people actually valued the product. Actually, if you build a good product, people value it. It creates a difference in their life, and they're willing to pay a good amount of money. We'd suggested, what, 300 rupees? We'd see 15% of the audience pay us full price. Absolutely no problem. I think
00:12:10
Speaker
like clear the tide and continues to have a cult following, right? Like, people are like, shit, this problem, this, this, this subject matter, this thing is really difficult, it's irritating, it's painful. So, yeah, clear tense is there, like, it's all my problem, all of those kinds of things. So, yeah, like, traction was, traction was there, traction was interesting. Obviously, from tech companies, from Infosys, Vipro, from Inmobi, from
00:12:34
Speaker
Microsoft, those kinds of companies at that time, and then tackled spreading into MNCs, conceptors, every company. At this point of time, probably 5 million people have gone through the platform and who filed with us and across the country.
00:12:52
Speaker
People from the government themselves, there's no problem. It's just a simpler way to file your tax returns. It doesn't matter how complex your tax returns is, it's just the simplest way to. People from the armed forces, because for a lot of them, they don't have any other options. And I think one of the harder things for us to
00:13:09
Speaker
articulate or tell people was key look clear debts is not for if you don't know how to find actually that's clear that is also if you don't want to deal with all of the problems that come around with it right so yeah like really really positive direction and
00:13:27
Speaker
we didn't have money right like whatever money we used to earn from those monetization experiments we just go into keeping AWS on and I don't know if you were on AWS like that but yeah it would we were completely bootstrapped so all growth had to be really really organic so we used to write blogs and guides and an insane amount of content I used to like cold call HR heads of companies and say hey send my send an email about
00:13:55
Speaker
clear tags and free filing because we're here to help your employees, et cetera, et cetera. We do like programs, word of mouth, people like pinging on Twitter or all of that. And that really built an enormous strength for us as a company. Even today, we don't.
00:14:10
Speaker
spend money randomly on advertising. Organic is really, really important. What I'm really proud of, one of the things that we're proud of when we change as a company is if you search for anything, whether you're in taxes, you'll probably see a clear tax leak. When you don't have money, when you don't have funding or whatever, and you're counting every rupee that you earn, and you're swiping credit cards, keep things going.
00:14:33
Speaker
You really like a lot of creativity comes up so like 2013 you joined and became a co-founder 2012 okay and like what role did you take on and like how were you
00:14:54
Speaker
So it is the three of us at me and kids in our seats sitting in a room. And yeah, when you reach three of us, there's no other employees. There's no point saying co-founder. We just did what it took, right? Like, and I think what we could figure out what we're good at. I'm kidding. I think are the serious engineers.
00:15:10
Speaker
And like they do like, I was never a serious engineer. They did like backend and they did a lot of like the infrastructure and all that. So everything else mostly friend to me, like customer and okay, everyone did like everything, like customer support included, but I did customer support in those days. I did like PD and marketing and whatnot. I did design, obviously like I created like the mascot called Pinchy. I created like brochures, created the website, like a lot of front end.
00:15:40
Speaker
design at some part of the city, the rest of the time would be about like actually reaching out to each of in the country like
00:15:48
Speaker
getting them to send emails in their organizations, making sure that you're doing some kind of marketing paid and whatnot. Thinking about like, yeah, content, writing content, getting people, this kind of things. Doing work with a lot of freelancers and stuff. We had luck rings and money, we had hired any employees. We'd get interns from IT and they would do
00:16:11
Speaker
And they would like help us write code at certain times and stuff like that. Archit spent a lot of time on engineering and like metrics and stuff. And Archit would like, as CEO, he do like marketing, he do business development and some sort of discussions around fundraising and like product work.
00:16:32
Speaker
And fundamentally, all three of us were doing product at the same time, causing one person to do product, because we didn't even know about product management, truly speaking. Because till this point, maybe, except for us, none of us had worked with product managers. We were always engineers, and this business, that's all. We do engineering design and launching it, and at least we just automatically have this. So yeah, that's how we split responsibilities.
00:17:00
Speaker
So, I want to hear the journey in detail of that Vikas Puri Kothi, three of you, to where you are today. Okay. In a nutshell, I'll just tell you the nutshell, because this is 20, 20, 30 days, right? So, we went from
00:17:16
Speaker
that consumer tax filing scaled that up. Then we got into YC in 2014 and then we raised our first round of funding, moved to Bangalore, hired our first few employees. In 2017, we were doing consumer. In 2017, this big thing happened in the country, GST.
00:17:39
Speaker
But GST happened, and suddenly it opened our doors to not just consumer, but also enterprises, SMAs, and CAAs, and finance professions in a much bigger way. And then other things happened. Something called de-inversing happened in 2020. So it's a big journey. So how you want to capture it, what kind of questions you want to ask, and obviously far more has happened since 2017 onwards. So yeah, I mean, I think you tell me what's the best way that you think.
00:18:08
Speaker
Say yes, like when it was just three of you, you had like a pay what you want model. Did it stay like that? The payment for tax filing? I think, I think we raised funding and all of that. It was, it was, it was like that. Okay. And like, why see what is the... 2015, I think. Okay. Yeah. In 2015, 2015 tax season is basically when we probably like only a very small portion of the audience got it because otherwise most of the audience did.
00:18:38
Speaker
Yeah. Okay. But why, like, why keep it free? I mean, it's a service you're providing. Something like email being free is understood because then you monetize through ads or whatever, but tax filing being free, why? So, see, I think one of the key things really was people didn't have credit cuts or digital pigment instruments at that time.
00:19:01
Speaker
The main reason to start clear text was not, okay, here I can start monetizing every person. That was the first step in
Impact of Y Combinator Experience
00:19:11
Speaker
some sense. The first step towards helping people manage or deal with their finances and stuff. We also on the side were helping people incorporate companies. That's basically where we charged money. We helped people get registrations, licenses, all of those kinds of things. But at that time, people just didn't have digital payments.
00:19:34
Speaker
People didn't even have personal email IDs. Imagine this large MNC. I said, when would you do tax filing? You do tax filing in the middle of the day during work hours. That's when you're like, please tell me what to do, how to go about things. You wouldn't do it at home. So people would use their office IDs and
00:19:54
Speaker
you know those days were also people didn't have computers at home because i'm not talking about just people like us right i'm talking about people in you know smaller trans monetizing cities and stuff like the only quote unquote computer was in their workplace and these people like and i'm talking about india at large right like so we also measured a lot of things right like why would only like a lot of people didn't pay us not because they are
00:20:19
Speaker
trying to save money and being selfish or whatever, it just didn't happen. We had to pay. That's why we never put a paywall up front. We said, take money from people later on. We also knew that if you put a paywall up front, you're fundamentally preventing a lot of people from getting this value, which they sorely need. In some sense, I think we genuinely had
00:20:46
Speaker
total social service charitable, those kind of instincts very strongly. Also, these problems should go away. These problems shouldn't exist. People should have a much better life. So some of those total socialistic tendencies, which really informed how we did things, right? And so we never thought, okay, charging for software, right, then I think I'm fine, but like,
00:21:12
Speaker
Could there be other deeper monetization avenues or whatever? And this business is completely about trust and security. We never bothered with advertising or selling data or anything. Even today, we get, I think, probably over 200 million unique visitors to our website annually. You will not find one ad on any of our properties.
00:21:39
Speaker
It's truly about, can software change your life? If software can change your life, will you pay for that? Can you pay for that? That sort of thinking that we have. Sir?
00:21:49
Speaker
Yeah. Like I think monetization, we tried like upselling paid services. Look, if you want to, if you don't want to anyway bother with this, like here, get a CA, get a tax expert, like let them file the tax return for you. So we ran that marketally kind of thing. Right, right, right. Okay. Okay. You impaneled CA's with you who, and you would pass on those leads to them and take a. No, not pass on the leads because.
00:22:15
Speaker
We wanted to just control the entire experience. So we would, it wasn't an open market case of sorts. We would get CS on board. We would make sure. Yes. I mean, not even gig workers, right? Like it was more like partnerships or whatever. This is before like those words, gig workers and all of that.
00:22:37
Speaker
It was like partnerships or whatever, because these were CA firms, these were, you know, people who just passed their CA exam and they were on the start to creating their own firms and all of that. So, those kinds of things. And yeah, like, it was just a very, very, very small percentage because fundamentally the focus was how do you build software for both consumers? And okay, by the way, we always had software for CA's.
00:23:01
Speaker
So there's a version with the clear edge dot com product that you see in the text filing for consumers. There's also, at the same time, by the way, this is something which most people don't know, right? Like, we, like, CLs were our first audience and all of that, and we continuously, and we continue to support them, right? Like, there's Interim Text Software, it's called Textload, there's, there's TDS software, there's GST software. Like, CLs in some sense, like, just imagine, like, there are probably, what, less than
00:23:29
Speaker
a million CAs in the country who fundamentally handle 75 million consumers or 75 million individuals and 75 million businesses, right? Like insane amount of work that goes itself. Like we knew that that market, right? That audience also suffers from very shitty tools, very shitty like processes. Everything is friendly. Like even today, right? Like life is really crazy for CA firms on a certain like
00:23:59
Speaker
tax deadline days, they would just not go home. Like, for us, it's very, for us, it's very like, like, that CA is not going home. That's me sitting in, like, probably sleeping in the office, like, getting tax returns filed. It's really, really difficult life. So CA is finance professionals. I mean, the same thing is in any finance.
00:24:18
Speaker
team in any company also. So you had the products for CA's, like right from the beginning, like 2013. Okay. Yeah. And when did you get into YC? We got into YC in 2014. And what was the scale at that time? Like, what kind of revenue or number of returns being filed? I think that was, I think it escaped me, but
00:24:44
Speaker
somewhere between like half a million to a million kind of returns at the time. Okay. And revenue? Nothing to speak of really. So what was your pitch to YC? The pitch to YC was like, pitch to YC is fundamentally just that, right? Like the income tax, income tax filing in the country is broken, right? It's paper based, it's Excel based, it's very tag tools that exist. We are automating it through software.
00:25:13
Speaker
If you're taking a problem, people don't need to think about anything. You upload your form 16, in five minutes, you're done with filing it. I think that was really the pitch to YC. At some point, we can solve for other problems. We can solve for other kind of issues.
00:25:31
Speaker
that really wasn't a big thing. It was just about simplifying the financial lives of people. So that YC experience. So YC is also like a mentorship program in a way. So did it shape the direction of the business going forward? Like once you got into YC, like what changed after that? YC was brilliant at the time. This is a time when you didn't have too much of a startup network or whatever and any kind of
00:25:59
Speaker
startup stuff, especially for, you know, digital products, right? Or SaaS. Like we were, it took us a very long time to figure out we were SaaS, right? Like versus, everything was just like just lumped into, lumped into the startup tag or whatever. Like anyone you talk to in the ecosystem, they'd be like, have you built a market? What? We're a software company. Everything was e-commerce at that time. Everything was e-commerce. We just built a marketplace. No one here understands
00:26:29
Speaker
this, right? No one understands. And free tech did not exist as a word or whatever, right? So, and like the only place where software or whatever was being built, it was fundamentally the US. So, and why see, obviously, like we've seen Dropbox, Airbnb, so many different companies, Justin TV, all of that come out at the time. So we applied and we got in. And I think that really transformed us from
00:26:58
Speaker
just three kids in a code heat because we're so serious about product building, about product management, and stuff like that. We had Google Analytics and stuff in our product series. We didn't know how to do that. They went through every single page. Hey, what's the drop-off on this page? What's the conversion on this page? What is, are you raising events? Are you raising these kinds of goals? Where does the workflow break? Where does the workflow continue? What are your error messages saying?
00:27:28
Speaker
and really, really go deep into software, really go deep into measuring data analytics performance. None of this existed as like, these are known fundamentals right now, but at that time, none of this really existed. So I think YC really helped us in it. I think we had done a bunch of things ourselves with respect to marketing and growth and all of that. I think YC really helped.
00:27:53
Speaker
talk to us about product-led growth, reference programs, and how to do word of mouth. It's fundamentally a little bit of governing, where your adults, it's you running your own company. There's no one quote unquote, helping you, but you have to be accountable and move as fast as you want to. And you have to come out and ask for help advice, et cetera, et cetera, while they'll give you some
00:28:16
Speaker
principles and things like, but I think that the network of really sawn and really interesting and really, like, I think, aggressive companies around you and very smart people around you, that really sort of changes life, you see how other companies have done things in similar geographies, other geographies, what kind of progress in which that shared sort of, you know, helps you with the bigger region.
00:28:44
Speaker
Not just build a bigger vision, but I think it's nice about building a bigger vision because vision is fundamentally yours. People can't really help people with that, but then it'll help you really get ideas very quickly and test out ideas very quickly. And you can learn from other people's mistakes and other people's successes. There's one thing which PGE Polymer had said. No matter what idea you have, there's probably someone out there who spent 10,000 hours thinking about it.
00:29:13
Speaker
Now, can you sort of use their leverage their experience, that kind of thing. So that was that was really interesting. And why she takes some equity and gives some money, right? Correct. 7% equity gives at that time, 120k USD, something like that. And till when do they hold the equity? Like, do they? I mean, you hold the equity. Okay.
00:29:40
Speaker
I mean, you just have to be holding it. Okay. Like till IPO, they hold it up. I mean, it depends. At some point, they need a certain thing, but who knows? Maybe at IPO, maybe when each company gets acquired. Okay. Got it. Got it. Okay. So post-YC, then tell me how did things change. And I guess that is when you also decided to have a more formal monetization strategy. So tell me about that journey.
00:30:08
Speaker
You would think. But so, post-YC, we came back to India. We moved base from, I think, Delhi to Bangalore. Fundamentally, I think, better access to
Expansion into GST and Business Solutions
00:30:21
Speaker
talent. Because you have to move from Vikas Puri. Now, from Vikas Puri, you could move to Gurgaon, or you could move to Bangalore. It's more or less the same. We chose Bangalore. And I think our first set of employees, et cetera, started coming in. We scaled up income tax filing.
00:30:39
Speaker
a bunch of ancillary experiences, like generate your entry seat. We help enterprises generate their Form 16s, build TDS software and enterprises. Okay. And 2016 was a time when someone from the government... The only funding was the advice scene, like 2016? No, no, no. We, I think, raised money from Sequoia.
00:31:01
Speaker
and Sir Fartner is now an innovation company. Sir Fartner is the best. So we raised money from them. I'm sorry, I'll just finish. And like Peter Thielen, or a bunch of other people. We raised, I think, I think at the time, what, 15 million? Pretty large, like a series A. It was a series, yeah. Which is a pretty large series A for that time. Correct, it was. And because
00:31:28
Speaker
The next round we raised was 2018. Because I think this is one of those businesses where you can burn and grow. SaaS is not a place where you can just burn and scale up. Or for cash debt and scale up, you really have to build software, monetize, create revenue, build features, those kind of things. And honestly, we didn't know we were SaaS, but we never thought about that.
00:31:54
Speaker
And by 2016, you also had pricing tiers? So on the consumer side, I think we actually started giving out more for free, but the market was the angle that we're taking at the time. We were genuinely experimenting. We were figuring out, OK, what all could we do on the consumer business? Is marketplace one kind of monetization? Can you? We didn't have, I think,
00:32:23
Speaker
or we didn't feel like while there were probably a few million people filing at the time, we didn't feel that was enough to, you know, monetize in a big way. Like probably scale it up even more and then start monetizing. So but like other monetized software itself after some time. So you were monetizing like the TDS software, the software for CEO firms, that stuff was getting monetized. Okay, got it. Right. So yeah, let's come back to 2016. Yeah.
00:32:51
Speaker
Yeah, so in 2016, all of this was happening. When someone from the government reaches out saying, hey, you guys are the biggest user of the government API, tax API, there is this thing called GST, which is coming next year. Why don't we go to something about it? Interesting.
00:33:13
Speaker
But we were a consumer company with GST, business sales, et cetera. And I started thinking about it. The interesting part was our stated mission at the time was building, simplifying financial lives in India.
00:33:28
Speaker
Isn't it interesting for some financial drivers? And we knew, we always knew that GSD was coming at some point. It was supposed to come in 2016, but I think it got pushed in 2017. We knew that there's probably some play that we could do there, but never thought about it beyond a certain point. But now, this was suddenly on our doorstep. We knew that, hey, taxes is something that we understand very well. Building deep workflow software is something that we understand very well.
00:33:58
Speaker
Notice how I didn't say SaaS, but the pain was crazy. Imagine the company, any company, like Tata, Nokia, whatever, till that point of time, they had to find two returns in a year, service tax or sales tax returns and all of them. Just stick and tick and outsource it to someone, do it. Now, with GST, they have a presence.
00:34:24
Speaker
every state in which they have a presence, and typically any large company has a presence in every single state, right? Every state in which they have a presence, you have to file three returns every month. So three into 12 plus one, we have three 30 states or whatever. Now,
00:34:44
Speaker
And finance departments still are on pen and paper because no one builds software for them, right? Like the software is built in like 1980s or whatever. Yeah, yeah. Tally is like the default, right? So it doesn't scale up and stuff like that. Things happen on Excel. Like finance professionals have a really hard time. So look, this is a huge opportunity. And because you're also going to businesses and enterprises, that's the place where you can
00:35:12
Speaker
you know, make revenue, start monetizing all of that. So we went behind that opportunity. So we grew, I think at the time, probably like 60 people to about 300 and something, 350 people in a few months. Create a scale up, right? Because GSD is like that. And at least, you know, consumer taxes and stuff, we felt very strongly about it. We knew it, we understood it, et cetera. GSD still a little bit
00:35:41
Speaker
difficult in the sense that you have to put yourself in your shoes, you have to think like a finance professional, you have to think about accounting, you have to think about a treasury, you have to think about taxes, supply chains, distributors, so many different things that you have to do if you have to build that out there. There's a new law in the country which is new, it's completely new. Otherwise, income taxes or TDS or whatever,
00:36:08
Speaker
You've had a decade or two decades to think about it and people have gotten used to it, companies know what to do. Now suddenly, building a solution here becomes not just about software, but also educating the country about the law, about educating users about the law when they're using your product. Because they're like, boss, I'm using you because I don't know what to do.
00:36:35
Speaker
You better get everything right. And this is the company finances, which is in crores or hundreds of crores, thousands of crores of rupees. If you screw this up, I'm never touching you again about interpreting laws from the government and then making them into software. And at this point of time, where VST, I don't know how much you remember, but every week, 100 things were changing.
00:36:57
Speaker
till probably 2019, every week, then the GSD person meeting, boom, 25 different things will change. Yeah, things moving from one slab to another and like all these special interests. Yeah, not just labs and rates, but also laws, right? Like the GSD funds went from a certain set of firms, the number of firms is continuously changed, right? Because I think the government is also trying to figure out because this is the most forward looking tax
00:37:26
Speaker
or finance implementation that anyone in the world has done. Okay. So help me understand why you say that. Like as a layman, I don't fully appreciate GSD. Like what's the big deal? So for a layman like me, help you understand why you're such a big fan. In general, right? Like taxes are
00:37:45
Speaker
self-declaratory or whatever. In another country, you could say that this is me as a business. I want this much. This is the tax that I'm supposed to pay after my missing my expenses, which I need for running the business. The tax is also a value added tax. You only pay on the value that you create above what you've already purchased. So now in India,
00:38:10
Speaker
where the government doesn't trust its businesses, businesses don't trust the government. And in this kind of system, the only way to actually have an effective tax system is where there is transparency in the entire chain.
GST Compliance and Enterprise Solutions
00:38:26
Speaker
So how GST is implemented is that on the 10th of the month, you declare how much sales you've done.
00:38:36
Speaker
and what your tax liability is because of the sales. Then on the 20th of the month, you declare what purchases you've made. So that means you can sort of minus the tax liability from there, right? And then you pay the differential, you pay how much you're supposed to.
00:38:54
Speaker
This is obviously me who grossly oversimplifying it, but it's a fundamental nature. Now, since the government asks you to, at some point, this is what you've done. But purchases, now the interesting thing is, your sale is someone else's purchases, right? Your purchases are someone else's sale. So, there is like, there is something called the two-way form or whatever, where every purchase that you've made,
00:39:20
Speaker
is listed there, where your GSTIN or your business is the receiving party. So now there is a system by which there's both checks and balances. Now the government's made it in a way where you can claim purchase and offset that liability only if your lender or your supplier has actually showed that invoice. If they want to show that invoice, you can't claim that ITC input that's created. So you go check
00:39:50
Speaker
your vendor get them to file and then only. So now this is basically like a self-governing or this the right sort of incentives for everyone in that chain to be honest and transparent and then like fundamentally if everyone is honest and transparent then everyone gets benefited, right? You do more sales, you pay more taxes but you can actually claim all of the credits that are owed to you. Everything is digital, everything is electronic, right? Whatever
00:40:20
Speaker
Act in invoice by invoice level just imagine the invoice by invoice item by item, HSN code by HSN code you have to calculate all of this and then do that and just imagine like large enterprises where the number of like think about e-commerce and all that where the number of sales or purchase transactions they amount in the billions per month right there are people who's there are people whose Excel finds that they export their sales is about like 40-50 GB.
00:40:44
Speaker
that it's that technique. That's how big the example is. How can you deal with this? You can't even open it in your computer. How are you going to build software to do this? So that's the kind of
00:40:55
Speaker
problem statement in GST and compliance in general, right, for businesses. What did you want to build here? This would obviously be a paid service, right? Like they would, you know, free software. I mean, there are free trial periods. There are free trial periods, it's SaaS, right? Like you come and you have like a 15, 30 day trial period, and then you can start using it. There are a couple of other products that we built out after that, like, and I think
00:41:24
Speaker
This year, we also moved from clear tax to clear, because I think the vision always was to simplify finances with software, and we stopped being about only taxes.
00:41:37
Speaker
something called eBay bills came out in 2018. Basically, if you're sending a truck with goods, then that, you know, document needs to be submitted to the government. Like before we come to what was the first product, you know, was it just like GST invoicing? Like, use this to send your invoices and then it will give you that. It was GST, it was GST filing. There was GST invoicing module also. But I think SMEs at the time just relied on
00:42:05
Speaker
CAs and what not to go about invoicing. GSD invoicing, GSD filing. The GSD filing would ask you to upload some sort of a spreadsheet and then you could directly through it. You had to fundamentally connect to your system of record. You could upload CSVs, you could upload Excels, you could directly integrate with APIs, you could send us files via an FTP,
00:42:33
Speaker
on a call but two different methods because now you're fundamentally building in the breakage of all of that so we could take all of that data we would
00:42:41
Speaker
We would run all of the rules. We would do the validations. We would tell you, hey, all of this is wrong. Go fix it. Because fundamentally, your ERPs, accounting softwares, all of that are built for accounting. They're not built for compliance or GST. Those rooms are just too complex to figure out. You need to spend your doing this to actually build something.
00:43:05
Speaker
for that. You sometimes overpay taxes. You sometimes don't take the right credit. You end up working with bad vendors sometimes and you may not block payments for them, etc. There are so many different things that happen. Just dealing with all of this data and simplifying it for people, giving all of that insight and validations and all of that. I think we probably have
00:43:31
Speaker
the most powerful reconciliation software in the world at this point of time. Because we reconciled, like we can reconcile 20 million records like that. Because the number of documents and invoices and items that you have to reconcile, the number of data points that you have to reconcile is crazy. Work us by fetching data from the GST portal, like off.
00:43:51
Speaker
You have to fetch data from the JST portal, which is also not very easy. I can just imagine. You need like OTP, a bunch of OTPs, as many OTPs as you have staged, and the OTPs are valid for a very short amount of time. And depending on the size of the data, sometimes, and if it's a deadline or not, sometimes the servers would be choked, so you have to retry again and again. You may get junk data sometimes, over-write it with the right data.
00:44:17
Speaker
And then you bring purchase. Purchase data typically that people enter is not because it's purchase data, right? It's mostly used for accounting. So people don't really do a good job recording everything properly. So you have to clear it, validate it and then bring that up. And now when you're dealing with millions of records in either, it's not as simple as an Excel VLOOKUP. Think of it like writing a very, very complex VLOOKUP across 20 or 40 different variables with like fuzzy limits.
00:44:45
Speaker
saying because you may say 85,000 rupees 383 the other person may say 85,000 rupees 400 now you match that and someone may say 40,000 40,000 something something I think there's so many permutations and combinations here right so we
00:45:03
Speaker
unknowingly built the most powerful, crazy amount of stuff that goes into like just powering businesses. So the first product that you launched this, like helping businesses to calculate GST, reconcile it and file the return. Yes. So that's the interesting part. When you come from a consumer product, say like, yes, it's one product.
00:45:24
Speaker
But then if you talk to anyone who does enterprise programs, oh yeah, there are like five different projects here. I think that was also a very interesting journey, right? Like understanding, because you've gone from now only being a consumer company to now being an enterprise company as well. Now being a senior company and an SME company as well. So very sort of interesting, challenging sort of right there, figuring out, okay, how do you do all of this? Because, you know,
00:45:53
Speaker
fields, BD, marketing, connection, just the quality of software, the kind of certifications and the kind of language that you have to say in communication is so very different. And there are very few, I think, companies out there that you can look at and say, these people are doing two different things. Let us learn from them. We had to figure all of this out as is to build
00:46:20
Speaker
We have consumer DNA. Great. Now we have to build enterprise DNA. Can it still work in progress? How did you figure out pricing for this? Like 2017? We gave a lot of very complex, very valuable software for free in the beginning because we just didn't know how to charge.
00:46:38
Speaker
tried all different models. We sold just annual licenses. We didn't license and meet our people. We didn't check for usage and all of that insane amount of abuse and whatnot. We had a lot of, because we were selling software to SMEs and CAs and enterprises, there's a lot of collision, right? Like, are they saying software you're selling for this much? Those weird kind of things. Yeah, I mean, it wasn't easy. We just had to go do the hard yards, figure out like, you know,
00:47:07
Speaker
Suppose you go into a young salesperson, they go to an enterprise CFO. The guy, you'd say, here, this is such an awesome software. School software is going to create so much union lives and sales. A couple of lakhs is the ASP. In CFO, I have the selling price, sorry. I haven't been selling price. It's a very weird shit. You'd go to an enterprise, you'd go to the CFO, and you'd tell the CFO, yeah,
00:47:36
Speaker
Caution software is like 2 DAX or something. QFO sees like a young sales guy on the other side and says, yeah, I have like 20,000 rupees. So going all the way from there to now building like a huge enterprise brand.
00:47:57
Speaker
very, very interesting journey, like figuring out everything, like, I mean, there's no, I can't tell you any sort of secret or any kind of like, quick hack. It was just like, doing the hard yards, making an insane number of mistakes, but just staying with the problem, right? Like, it's very easy to get disheartened and say, you've been software of value. At some point, people will genuinely see the value.
00:48:22
Speaker
right? If it solves a problem, if it like saves them time, saves them money, gives them peace of mind, you are creating more value for them than you're charging, right? Like, you'll see that. Okay, so like you were talking about the journey from clear tax to clear and how after this GST solution, what were the subsequent steps that led to the rebrand also. So tell me about that, that journey, like
00:48:52
Speaker
So, in 2017, after GST was launched, there was something called ebay bills that happened in the country. Basically, whenever you're sending out the goods as a business, the invoice needs to be sent to the government. You get an ebay bill number, and that's what goes with the shipment of the goods. And unless you have that ebay bill,
00:49:15
Speaker
You can't send goods up, right? The truck is waiting at the warehouse and such. So a bit of software for that. Fast forward a couple of years, in 2020, the government said the eBay bill is good for goods invoices and stuff, but now, for any business, no matter what invoice you're creating, right, like B2B or B2C,
00:49:39
Speaker
send that invoice to the government, and then only it becomes valid. So this is a huge thing which has happened to the country. Most people don't realize it also, right? Like this is called envoicing. And the government launched it in tears, right? They said that, OK, October 2020 is only 500 code plus. Then January 2021, 100 code plus, April 15 code plus, et cetera, et cetera.
00:50:02
Speaker
so they don't shoot in stages but basically for any how does this work like e-invoicing again as an outsider who doesn't know yeah so e-invoicing and e-wave bin right is real time basically um you see if you're if you're if you're a b2b um creating a b2b invoice or something as soon as you make it in your erb you have to
00:50:25
Speaker
There are 140 fields that you need to fill up. That needs to be sent to the government and it automatically responds with an IRN. And then you have to put that into your invoice. You can print it in a particular format. There's a QR code that comes out. You have to put that in as well so that anything can be checked for validity. Because GST is downstream. Invoicing is upstream. So now the government... What is the difference? Sorry, like GST downstream invoicing upstream.
00:50:55
Speaker
the government gets to know about every sale or purchase when it is function as opposed to getting it like 45 days later in a GST.
00:51:10
Speaker
far more data coming in, right? So basically, now, if GSD is monthly, this is real, right? Like four in the morning, the four in the morning, the sofa that you ordered from IKEA has to deal with that where our set come to you. So
00:51:26
Speaker
But without an e-vapial or an e-invoicing upper, it can't leave the warehouse. So now, fundamentally, we were at a stage where we're now powering millions of invoices
00:51:41
Speaker
I want to ask more about this ebay bill and e-invoicing. So e-invoicing is replacing ebay bill, like if you have an e-invoiced and you don't need an ebay bill. So ebay bill is a subset in some sense, they're now combined, but it's a subset. So when you order something on Amazon, which comes from a broader world, you get something called an AWB, which is an air wave bill number.
00:52:04
Speaker
That's for the transpoder, that's for logistics. So e-mail builds are for logistics. The e-invoice is basically the digital version of the e-voice itself. Okay. So like e-mail would only be covering when there's a transportation element, but e-invoice will cover everything, whether there's a transportation element or not, both kind of invoices then need to get registered. And
00:52:29
Speaker
Before you can actually send an invoice to your customer, you need to get that IRN. So that's why it is real-time. The invoice isn't valid if it isn't any invoice. It's like that, mandatory in the invoice. For large companies, they can no longer like this paper bill cut. That is no longer possible now. Okay. Got it. Got it. Okay.
00:52:51
Speaker
And this is, what is the rollout plan for this? Like you said, for 500 crore. It's rolled out to oil companies above 50 crore at this point of time. Soon it'll come to companies below 50 crore in either one big bang or a couple of phases. I think that's still happening.
00:53:11
Speaker
So the interesting part about this, this is real-time. This happens at any time. So now that means your software, your API, your infrastructures, it's sort of like payment gateways or anything, but there's even more data that you're processing and you're sending. And you need to rely on so many different third parties. You have to integrate with ERBs, you have to integrate with the government, you have to make sure that everything is up and running. You have to have two or three fail-saves if something doesn't work.
00:53:39
Speaker
If you screw up, you're fundamentally affecting commerce in the country.
Rebranding to CLEAR and New Ventures
00:53:44
Speaker
You're creating crows of losses for businesses. So it's that kind of criticality that now your software is dealing with. So you build software for that. This affects payments, this affects the credit and all of that. So I think with all of these changes and with
00:54:03
Speaker
covid with with like deeper penetration of like the internet with digitization with better payments infrastructure and upi and whatnot I think like businesses have realized that okay moving changing their arcane systems into digitally is not just helpful from a time savings for people perspective but also getting paid faster like the nature because like you have data which is available so digitally right now like the nature of
00:54:33
Speaker
Credit also is changing so much right like it today like credit in the country for any business it's completely collateral based right like a back would just give you credit how to care you have this business you have these are entry credit. No like credit can genuinely be based on merit right like how much business are you doing who are you doing business with.
00:54:54
Speaker
Businesses now have, with all of this, like GST, invoicing, VA business, etc., so much digital data. All of this is happening, right? We're actually extending credit to businesses. We're working with large enterprises, giving credit to their supply chains. We are solving for vendor payments and all of that with their ERPs. No.
00:55:16
Speaker
We don't like now the word clear tax rate, like as a brand for the public, I think started.
00:55:25
Speaker
like, not being the right articulation of OVR. At this point, we weren't like, oh, we're doing work, we're doing things, we're clear tags, I know, but we're clear tags, but we're doing more, like, that was interesting. But I think the beginning of this year, we're like, Tika, this is something that we need to change. We tried out a whole bunch of different names, and we're like, yeah, like, clear,
00:55:48
Speaker
clear is the best. It really sort of represents, I think, who we are. Things are clear. I'll never get tired of saying that. So that's where we decided that, okay, you know what?
00:56:04
Speaker
We are clear. We build SaaS for invoices, payments, taxes and credit. That's our new articulation. We continue to be on the mission of simplifying finances for India. That hasn't changed. But so many other things have. I think only now have people started realizing that they don't only do consumer taxes.
00:56:34
Speaker
They are towards the journey of actually doing all of this, powering millions of invoices, millions of invoices every week, powering a lot of credit, a lot of payments for businesses, creating an operating system for small businesses. One of our products is called ClearOne.
00:56:54
Speaker
That's like fundamentally like the OS for businesses, like SMEs, like how can you do everything that you wanted, like invoices, payments, taxes, credit, all of that through one app, et cetera. Like also going mobile, like in the past couple of years, we've shifted from a pure web product to a mobile oriented product as well. I think.
00:57:18
Speaker
We realized that now we have real justice to what we are as a company, and that's where it clears care. So what are, like you said, payments and credit are like the roadmap now in terms of building products. So what are you building in payments? Let's first talk payments, then we can talk credit.
00:57:38
Speaker
I like payments is still, I think skunk works right now. So I won't talk about payments, but I could talk about like, I could talk about like what we're doing on SME. I could talk about what we're doing on credit, all of those things. If that's fine. Yeah. Sure. Sure. Yeah, please. So like.
00:57:54
Speaker
Now with GST e-invoices or where businesses have an insane amount of data and there's now evidence of who you're working with, who you're buying from, who you're selling to, like what the health of your business is, et cetera, et cetera. You obviously have to deal with an insane amount of data, crunch it, but we can now
00:58:17
Speaker
help supply chains with just getting credit faster, getting paid earlier. We have an invoice discounting product where we're working with enterprises, financiers, and vendors. You can just open, you'll get notifications on.
00:58:39
Speaker
the invoices that you have, which can be where you can get early payments. So we are powering all of that credit via drudgery, via tank financing, all of that. So that's happening in a pretty big way. On the SME side for these vendors and SMEs in general, we have this product called ClearWhat, which is
00:59:00
Speaker
the, like, how are we internally talk about it is that it's like the operating system for businesses, right? Like you create invoices, you receive payments, you get receive payments in what will let like you get the difference. Yes, so fundamentally, so think of it this way, right? Like, when, when a business does a transaction with you, there are five or six different things happening or which will happen, right? Like,
00:59:27
Speaker
There's an invoice that has to go out. There is payment that has to be collected. There is down the line, any invoice, a rebate bill that has to be created. There is taxes that have to be computed. And when we're talking about the invoice that has to be created, it's not just a simple receipt or whatever. It's a full-fledged invoice with those 140 fields or whatever that makes it a valid invoice that needs to be sent out to someone.
00:59:57
Speaker
So, all of these things happen in the background, right? Now, how can you just take away all of this complexity and just make it like dead central for businesses? So, that's where our software, ClearOne, comes in. You, like, enter a bunch of details on a mobile app, boom, everything happens in the background. A payment link sent out, you can collect payments directly from, you know, your customers and taxes, like, computed for you, etc., etc. So, like,
01:00:26
Speaker
like far, far beyond like poor old accounting systems. Like this is truly like operating system for your business in itself.
01:00:36
Speaker
And does it develop as an accounting system also? It does develop as an accounting system today, but it's on the roadmap. But I think what's getting interesting is like in other places in the world, accounting systems of ERBs and invoicing systems are actually now becoming different. In India, for example, people haven't ever
01:00:58
Speaker
thought that deeply about invoicing versus accounting because accounting used to be something that you give to like your accountant back office company, you don't have to care about it, whatever they use, they use. But now all of these things are really changing, right? Like if you don't do your accounting properly on a regular basis, you have a horrible time dealing with taxes and compliances and whatnot. Invoicing is sort of like the gateway into all of this. Got it. Okay.
01:01:25
Speaker
And are you also planning to do stuff like POS software, like for like retail level companies and stuff like that? Not at this time, not at this time. But are you like looking to do acquisitions and become like full stack, like acquiring a POS software company or stuff like that? I think those strategies we still are figuring out, but nothing to say about it at this time.
01:01:54
Speaker
E-invoicing, interestingly, E-invoicing helped us go international also. So just about a couple of weeks ago, fourth of December is basically when E-invoicing software went live in Saudi Arabia as well. And we're expanding near the Middle East with invoices and taxes soon and other geographies in the world as well. So that's also a very interesting stuff
Global Expansion and Future Revenue Streams
01:02:20
Speaker
that's happening.
01:02:20
Speaker
So like Saudi has like a similar requirement from the government of making an invoice or you're just talking of like a, not like a government thing, the invoice, but just the invoicing software. Invoicing is one of those things which is also an international phenomenon in some way. Invoicing basically is the digitization of an invoice and standardization of an invoice in some sense. That has never existed, right? Like it improves
01:02:50
Speaker
how businesses, you know, operate with each other. You don't have to sit and waste time punching in data all the time. So, like, the E-invoiced global phenomenon, like, there is mandatory E-invoicing in Latin America. India is the first geography outside of that, which is doing mandatory B2B invoicing. There are certain, like, Europe, for example, has mandatory B2G E-invoicing, like, when you're invoicing to the government, and everyone, people are moving into the B2B zone and stuff. So,
01:03:17
Speaker
with i think other geographies like middle east and australia and what what. E-advoicing is something that the government or the regulators are bringing in as well to start. Like actually seeing data on how businesses operate, actually trying to figure out what's happening in the economy. Yeah, it's all real-time insights.
01:03:39
Speaker
Exactly. So Saudi Arabia is one of the countries which is starting that right now. UAE is also going to go live with that soon, rather than much of other places as well. And fundamentally, e-invoicing is similar. There will be language changes. There will be layout changes. There will be some rules here and there. But for the large part, it's similar. There are geographically specific things.
01:04:07
Speaker
you're not dealing with tax law in one country, you're not dealing with tax law across the world. So that's also how we see at some point go from simplifying finances for Indians to simplifying finances for the world. That's also one prediction in which we're heading into.
01:04:27
Speaker
Cool. So currently, are you at liberty to tell me what is your ARR or what will be your revenue this year? I wouldn't comment on that. Okay. But what is the split of your revenue? Which product or business line gives how much revenue? I mean, obviously the enterprise side of the business gets out of the revenue, but I think
01:04:55
Speaker
through our journey, right? We've always thought about monetization has always been something that we knew that we had to bake into the products, right? It's not, how we can get or figure out some hat based monetization or whatever. I think we do monetize on all of our businesses, like whether it's CEA, whether it's SME or consumer as well.
01:05:20
Speaker
But enterprise businesses are obviously the places where NASB's goes into lakhs and crores, etc. So, I mean, that's a place which would always be... How is the pricing done? Like, is it on a turnover basis or is it on number of devices?
01:05:37
Speaker
Pricing is basically done in terms of, it's a, it's a big sort of number of like how much data you bring into the system. So number of invoices, items, reconciliation, for example, is very compute intensive, like depending on how much reconciliation is that you're doing, because if you reconcile any, if you reconcile any more, right? Like we have a product called XIDC.
01:06:00
Speaker
which fundamentally can help you get about 3-4% more on your avatar. Because fundamentally, there are a lot of businesses, all businesses across the country, calculating how much taxes to pay, which vendors actually are compliant or not compliant, where to block payments, where to block taxes.
01:06:28
Speaker
questions that a lot of companies don't have answers to. And because of this, there's a lot of lack of optimization and efficiency in the kind of payments that they get. So we have max ITC product and credit products, which actually create value for businesses. And they're obviously at a different pricing. You need to do a lot of the credit. Is that like a
01:06:54
Speaker
product you price from like the borrower or the lender is sharing the interest revenue with you? The credit product, we're just launching. We're just launching. There have been a bunch of, like there are early beta customers and all of that we've done this with, actually seeing an insane amount of value. So we will go to do a public launch. But the thing is, like if this comes out, let's say in March, then maybe the PR would have happened by then.
01:07:23
Speaker
On the credit product basically we so we work with enterprises and we do early payment for them and these early payments go as a discount on the invoice value so that's that discount is basically where enterprises earn money.
01:07:41
Speaker
And that sub-part of it is shared with you. We do. Yes, we do. We do our sharing. Got it. Got it. Okay. Okay. And like going forward, say what do you see as the revenue split between various businesses? I mean,
01:07:57
Speaker
And why I'm asking is because I think credit is like the flavor of the decade, you could say in a way that credit is what everyone wants to monetize on. So do you see credit as becoming like your flagship contributor to revenue or will it still be SaaS subscription or what do you think it's going to look like?
01:08:20
Speaker
That's a very interesting question. Like how we genuinely think about it is that I think these two business lines, right? Like it's, it's not either or like, I think ours, like 2025, I think the clear software is going to be fundamentally powering most businesses in India, whether really small or really large, irrespective, right? Like, so I think subscription is going to be a very, it's going to be a significant revenue driver. And I think.
01:08:50
Speaker
financial services, credit payments, I think that is going to be either as big or larger than the subscription, SaaS subscription side of the revenue side. Okay. Got it. Got it. Okay. Okay. Currently, what is the split like in terms of like 50% of your revenue comes from say enterprise clients or what, like, are you at liberty to give her like a rough split?
01:09:19
Speaker
Most of the primary revenue channel is enterprise.
01:09:25
Speaker
But enterprises, see, that's the interesting part. Enterprises for us go all the way from someone who has a turnover of 50 crore because e-invoicing and all of that has started at that. They also take our tax products and other products all the way to some of the biggest brands in the country who are using us for e-invoicing, taxes, credit, all of them.
Funding Milestones and Conclusion
01:09:48
Speaker
At least two-thirds of your revenue must be coming from this, I'm guessing, or more. Got it.
01:09:54
Speaker
So tell me about the funding journey. So you had that 15 million fundraise from Sequoia and a couple of others. So subsequent to that, what has been the funding journey?
01:10:05
Speaker
Sure. So we raised a series A from Saif's correlation. So in 2018, we raised a series B, a 50 million series B from composite capital and existing investors. And then fast forward to this year, 2021, we raised the series C from Stripe, Kora Capital. And how much did you raise the series C?
01:10:33
Speaker
We released 75 million a series ether core capitals died and a bunch of other measures. This was the spotlight presented by the podium to listen to more such interesting conversations log on to the podium dot in.
01:10:51
Speaker
Before we end the episode, I want to share a bit about my journey as a podcaster. I started podcasting in 2020 and in the last two years, I've had the opportunity to interview more than 250 founders who are shaping India's future across sectors.
01:11:06
Speaker
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01:11:27
Speaker
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