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Democratizing access to finance | Bala Parthasarathy @ MoneyTap
133 Plays4 years ago
Our guest today is an achiever in more ways than one. Born and brought up in Chennai in a humble household, he pursued his studies from the prestigious IIT, Madras campus.
Well, he tells us that he wasn’t a risk-taker or had an entrepreneurial side to him as a kid but loved to travel and explore new places, people and communities.
In this episode of Founder Thesis, we are talking to Bala Parthasarathy, co-founder and CEO of MoneyTap - a fintech consumer lending startup. MoneyTap launched India’s first app-based credit line impacting Indian consumers across 50+ cities who struggled with access to affordable credit options.
Bala’s entrepreneurial foundation was laid when he went for a summer job during his IIT days and got into market research to earn some side cash. After completing his engineering from IIT, he went abroad to complete higher education from the University of California where he along with his batchmates deep dived into the entrepreneurial culture and started a company.
Having no prior fintech background, MoneyTap was an uncharted territory for him when he started this in 2015 with two of his friends. He worked day in, day out to reach where he is reached today and continues to hustle.
He shares interesting insights from taking a loan to buy the ticket to go abroad for higher education, learning different languages, hitchhiking across the Sahara, his travel voyages to the remarkable lessons from building MoneyTap. Tune in to listen to this exciting conversation with Bala Parthasarathy.
Key Insights from the episode:
- Learning through travel experiences.
- Being adventures and taking challenges head-on.
- Shaping the Future of Fintech.
- Lessons on funding from the lens of a venture capitalist.
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Transcript
Introduction and Initial Reactions
00:00:01
Speaker
Take a minute, I'm dead. I'm dead. I'm dead. I'm dead. I'm dead.
Journey from IIT to Silicon Valley and Back
00:00:28
Speaker
There are many IITians who have gone to Silicon Valley and built successful startups. There are a few of them who have also sold their businesses for millions of dollars. There are maybe a handful of them who have come back to India after such a successful run in the valley to build startups that solve problems in India. And our guest today is one of those extremely rare entrepreneurs who built and exited a startup in the Silicon Valley.
00:00:54
Speaker
came back to India and became an integral part of the Adhar Garde launch initiative, then became a VC before taking another plunge into entrepreneurship with his fintech startup Moneydamp, which is among the leading B2C lending fintech platforms in the country. Listen to him narrate his amazing journey to Akshay Dutt in this episode of the Founder Thesis Podcast.
Early Life and Influences
00:01:22
Speaker
I grew up in Chennai, so I grew up and did my college in the 1980s, 1984 to 1988 at IIT Madras. So I was born and brought up in Chennai and Madras in those times and studied in IIT Madras as well.
00:01:43
Speaker
Dad was a government servant. So he was the central excise. And so he was in a mid-level position. And mom was a housewife. Were you a risk taker as a kid? Did that risk-taking thing get started as a child? Or how did that come about? That entrepreneurial bug?
00:02:11
Speaker
It's a great question. And I've been sort of wondering about that over time. As a child, you know, growing up in the 70s and 80s in, you know, in South India, in a sort of a Tamram kind of a family, which I was a part of, definitely risk taking was not in my blood. Nobody I knew,
00:02:41
Speaker
other than one uncle of mine who went around to start a business, had ever taken any risk. So the mantra in those days was, and given the economy which India was at that time, was not exactly to start a business. So businessmen were like sort of this evil industrialist.
00:03:07
Speaker
Correct. So that's the movies you watch at all, like, you know, like revolting or, you know, against the big class, right? It was a very spiritualist, you know, that was the, that was the, that was what the stories were told are. So starting a business was A, not possible, and B was evil.
00:03:25
Speaker
So that was not even in my horizon. So I would say the one interesting thread which might have started this, which has been throughout with me from throughout my life, was that I definitely had an interest in travel.
00:03:45
Speaker
So when I was a child, you know, pretty much got in South India, Chennai, never, you know, never knew like life outside Tamil Nadu, pretty much. But, but dad used to have this, you know, this, what they call LTC, I think it's still there if you're a government officer.
00:04:03
Speaker
you all have like one trip out. So those days it was really unusual to, you know, people usually use it for pilgrimage, you know, go to some temple town. But that goes to Kashmir. And this is like, you know, way before the, you know, the whole instruction started, Kashmir was beautiful. But some of that I think was a spark in terms of saying, hey, you know,
00:04:22
Speaker
you know, the first time you go to, you know, Delhi and, you know, go to Kashmir, you know, people speaking different language, wearing different clothes, it was really a different country, honestly, language which I did not understand a word of. So, so that that was a, that was a very eye opening kind of event. And that sort of triggered an interest in travel.
00:04:52
Speaker
So later on, when I got into IIT, I still wasn't thinking entrepreneurship or anything, but I was definitely very interested in sort of travel. And one thing that also happened in IIT was that somewhat accidentally, I got into a summer job. And it was not done. Summer jobs were not done at that time. Side job, never done.
Developing Entrepreneurial Interests
00:05:17
Speaker
But almost all through IIT, I had a side job and a summer job. And the job was nothing to do with what I studied. But the job was for doing market research. Somehow I accidentally got into this. Was it to earn pocket money? It was basically only pocket money. So I mean, college education in IIT was somewhat subsidized. The fees were like 200 rupees a year.
00:05:47
Speaker
But that definitely did not have any money for anything other than sort of basic hostel and college fees, which was the case with almost all my friends as well. But the side job in market research, which was very new at the time, where you could go to
00:06:04
Speaker
you know, tea shops and restaurants and ask them which, you know, brand of tea they use or, you know, like door to door, seeing what scopes you use, you know, stuff like that, which they consumer market research. Somehow I got into this and I kind of like the money making aspect of it. So I got the taste of what is it to sort of make your own, make some money on the side. As a college student, you know, you could always use for
00:06:33
Speaker
use some extra cash. So actually what happened with that is that it kind of, it sort of started taking me places. So from sort of door to door, shop to shop, it was very brutal. You know, imagine going to a tee shop and standing and asking the guy how many keys he sells, right? That is the kind of stuff I used to do. I had an IAT student, which was not exactly, you know, done.
00:06:58
Speaker
But then I kind of graduated from there to do industrial surveys where you would go to factories and ask how many bags of cement they produced or, you know, strange places. So that kind of got me into travel and I would travel, you know, across, you know, across South India, all over the place. And try, you know, this is sort of pre-internet, pre-telephone days, right? So you basically just walk.
00:07:24
Speaker
And of course, you know, having the IIT brand helps. I would just say I'm an IIT student and I would basically go talk to the MD. Wow. Okay. But so that obviously I used whatever I could. But what it did do was not only I made a lot more money, but also got to travel to places which I would not normally go to, which
00:07:50
Speaker
You know, it's very unusual, right, because nobody knew what I was. My parents didn't know what I was. I would just take a suitcase and go to, you know, Shimoga or some random places which no Google Maps, no, no Google Maps, no ideas, ask people and speak the language, whatever, just sort of figure it out. Right. No advanced booking, no Google Maps. Right. No train booking. There's no online booking. You just show up and take an undeserved train and go.
00:08:17
Speaker
I did a lot of that almost every summer. So that was kind of one interesting phase, one thread. And later on, that kind of went, and even now it continues, and I'll talk about that a little bit later. But a sense of sort of adventure and a sense of sort of curiosity and exploration
00:08:46
Speaker
Coupled with also a thread of actually making money, you know, interest in, you know, working and making some money was, that was kind of exciting thing to do on the side. The other thread would affect your grades and all? Yeah, I totally did. So I was not a good student, particularly. And then partly also because I studied chemical engineering, which was what I got into IIT for.
00:09:14
Speaker
And I sucked at it. So I hated it. First of all, I didn't like it. And then I was also not good at it. Why did you pick it up? Because it was like the thing. Yeah, you had no choice. Okay. So pretty much whatever your rank, JE rank was, you got like, you know, there's a picking model. Okay.
00:09:36
Speaker
the top 100 people got into computer science and you know if your rank was 750 something my rank did computer science exist as a field in 80s yeah okay yeah so computer science existed it was just nascent it was just coming up so remember i'm totally dating myself so this is like before the age of pc's right so personal computer was invented in 1984 the year i joined iid
00:09:59
Speaker
I did not have PCs when I entered IIT. We were all using mainframes. That's why the second lucky thing happened to me was that, again, this is pure luck, that when I went to IIT, one of my seniors was two doors away from me. He was the final year I was in the first year. He was a brilliant guy. He was like the top of his batch.
00:10:27
Speaker
And for some reason, he took a liking to me and he got me interested in programming. And I just love programming. So the minute I got into IIT and I did my first semester, I did a course in very basic programming, some Fortran or something. But I was just hooked onto programming. It seemed like a little game to play. So while most of my friends were not interested in programming, programming was just too new, unless you're a computer science graduate.
00:10:57
Speaker
It was not particularly a cool thing to do. The electronics was probably maybe a little bit more cool to do than software programming. But it was very hard to do. You had to go mainframes and punch cards. So it was really very crude and very, very crude and very, very difficult to do. Now you do your punch card, feed it to a mainframe, and then six hours later, you'll get error in your memory. Wow. OK.
00:11:26
Speaker
So it was very painful to do, of course. At that time, I didn't know anything different. But almost all through my four years of college, I was programming. So about two, three years in, we got some basic PCs, some very crude machines. But somehow I knew that, I mean, it was very clear to me that I knew that I'm not going to do chemical engineering, and I'm going to do computer programming, right? That was my, so that was also clear.
00:11:55
Speaker
And these two threads are very clear that I wanted to I love traveling and wanted to see places and I like programming So when I exited IIT in 88 I was very clear to me that I'm going to switch to programming. So I never even applied for a chemical engineering job I got a couple of campus placements for programming And
00:12:21
Speaker
But then I had an opportunity to go abroad for further studies. And it was very clear to me I wanted to get a degree in programming. So I applied, I went to University of Southern California first. I couldn't get into any computer master's degree from undergrad. And also I didn't have any scholarship or any way to fund it.
00:12:46
Speaker
So basically, I went, I got a scholarship in chemical engineering. So I don't know why, but I got it. So I went, but it was very clear that even in the first semester, that I'm going to change, right? So literally, I went to USC and shifted one semester later.
00:13:08
Speaker
because they expect me to finish the degree, but I was very clear. I'm going abroad to switch. They continued to give me the scholarship. That was not a problem. Only for the first semester. I switched to a different college. I changed universities.
00:13:29
Speaker
And basically the first university that would offer me a scholarship, I was going to switch. And I think I got one or maybe two offers. I don't remember. But this was another piece of luck that I ended up in the Northern California. I ended up in the Bay Area. My university was University of California and Santa Cruz, just the Bay Area.
00:13:55
Speaker
And so I was very interested in computer programming and you know that was it when I'm traveling. Like a Silicon Valley thing at that time? Not yet. So this is again pre-internet I'm talking about.
00:14:13
Speaker
So there was no internet, right? There were basic, I mean, obviously computers were there, but mostly like, you know, heavy duty machines and so, but Silicon Valley was there, right? So it was, anyway, so went to grad school, but at grad school already, the entrepreneurship was very much a real thing at that time, right? Because of Silicon Valley.
00:14:40
Speaker
So because it was Silicon Valley, there were some startups. Apple was a very successful company. The notion of startups were there. Software, Microsoft, it was very successful. So there were startups, successful entrepreneurs. That thing was already there. And a few of my friends in the grad school, they wanted to start a company. And that eventually became my first startup.
00:15:10
Speaker
Okay. Yeah.
First Startup and Financial Milestones
00:15:12
Speaker
Okay. So, so we started a company right out of grad school. So like, how were you, so you got a scholarship, which would have paid for your university fees, but how are you sustaining yourself? Because your parents would not have been able to send you money to survive. Yeah, yeah, yeah. Parents had zero money. They didn't even have money to send me to buy a ticket one way ticket. So I had to take a loan to buy one way ticket. Wow. Okay. From your relatives. From a bank.
00:15:40
Speaker
Oh, okay. Like, was it easy to get a loan like that or like you? I had to pledge my house or something. Wow. Okay. Like some 50,000 rupee loan. I mean, it doesn't do a lot of money at the time, but still. So how are you surviving in the US then? So I did have a scholarship basic thing to for the grad school.
00:16:07
Speaker
But this entrepreneurship was on the side, like in grad school. Okay. Okay. Yeah. So we were doing this company, we didn't know really what we were doing, but now in retrospect. But at that time, it seemed like a cool idea. We were exploring various things. And along with my friends who were also in grad school. So when I finished grad school, I didn't have a green card or anything. So I couldn't do a startup.
00:16:37
Speaker
do my startup on the side. So we kept the startup on the side and I joined a job. But the job was also in a startup. So it was a startup company. And it was a good job. And luckily for me, the company went public in two years. Which company was this? It was a company called at that time was called Digital Link. It was a networking company. I was doing software there.
00:17:04
Speaker
And so this was like 1993 by the time I got my green card luckily in two years and the company was public in two years. So I was doing my startup on the side and then this company went public.
00:17:22
Speaker
So that obviously gave me a, I got my green card. So I could, you know, I was free, right? I didn't need to be tied to a job. So I quit the startup immediately. It took like a three months. I mean, did you get ESOPs and all? Yes. So that obviously immediately put me in a good financial situation. That became like the seed capital, which you could kind of draw on. At least, yeah.
00:17:51
Speaker
So, and definitely I could fund myself. So when I sold that company, I took three months off.
00:18:00
Speaker
And again, sort of back to the travel theme. So I went to South America for some reason I had a fascination for travel, especially in Latin America. After the digital link IPO, I got my green card, took three months off. And my startup was still going on. My partners are doing the work. I decided that I need to take some time off.
00:18:23
Speaker
I took three months off, some of it friends, some of it solo. I did all kinds of stuff, you know, hiked in the Andes and, you know, went to Brazil. I learned Spanish in the meanwhile. So you know, I speak Spanish pretty, pretty fluently. So I went to Brazil, I went everywhere, you know.
00:18:44
Speaker
Chile, Argentina, Peru, all kinds of places in those days were still pretty exotic. Nobody would travel there. So this was like three months off, which is good. When you're traveling by yourself, you really learn a lot and how to take care of yourself. Again, one more pre-internet. So it was not like you could do looking.com and Airbnb and stuff like that. There was nothing. No phone, you're just by yourself.
00:19:13
Speaker
And that was the same. I came back and did my first startup. So to fast forward a little bit, we sold that startup. Tell me about the startup. What was the idea that you were executing in that? Did it stay the same or did you pivot? We pivoted a lot.
00:19:31
Speaker
Um, and, um, we went from, um, we went from, you know, we want to do a medical software originally, uh, because we knew a doctor and he had some key. He wanted a software for, for his clinic, something like something like practice. Yeah. Okay. You know, it's like a very crude version of pre-internet practice.
00:19:56
Speaker
But at that time, it was just too complicated. So we changed completely and we went into basically software protection, anti-piracy software. And that's what we did.
00:20:11
Speaker
That company was reasonably successful. We grew it. We went through a couple of acquisitions, and we ended up selling the company to a public company called Rainbow Technologies. So that was a good exit for all of us. And this was bootstrapped. We had a full time in 1993. It took about four years, three, four years. And this was bootstrapped.
00:20:34
Speaker
This was bootstrapped, totally bootstrapped. So that must have been a pretty good exit. That was a very good exit, yeah. So the first one was an ESOP, employee ESOP. The second, totally employee, it was one of the early people at Digital Inc. The second one was a simple, was an acquisition.
00:20:58
Speaker
And so again, in the meantime, I had again done a lot of travel, I went to Africa, this, that. So somehow I got fascinated by Africa this time. So after we sold the second company, I took a year off. And this was in 97.
00:21:20
Speaker
Not yet. So I'm coming to that. So I took a year off and I had this whole thing of going all the way from, so I started in Turkey, went all through the Middle East. This is again, it was safe to travel in those days and everywhere.
00:21:45
Speaker
Egypt, Jerusalem, everywhere. And then my idea was that I wanted to hitchhike across the Sahara. That was my objective. Wow. Okay. Yeah. So which even in those days was very, very hard thing to do, even without pre-terrorism, pre-everything was a very hard thing to do. Right. So anyway, I'd come on by this time and
00:22:09
Speaker
And I posted on some news group saying, this is what I wanted to do. And one Dutch guy replied, saying, hey, you know, by the way, you can't really do hitchhike and all, but because there's no traffic there in that route. And it's a desert. You can't stand in the middle of the desert and put your thumb up.
00:22:31
Speaker
but he said look you know a few of us have the same idea so we're planning to buy like two or three SUVs in Holland and we're planning to drive across right and then sell the SUVs in when we reach across the Sahara in a country called Senegal. So we're trying to sell to Senegal
00:22:54
Speaker
Um, but, um, but you need to speak the language so you have to learn French. So, which I ended up learning. So I learned French before I travel. Um, there's zero English there. Um, and, uh, um, why don't you, uh, but why don't you, why don't you join us? So I said, cool. Why not? You know, that sounds like a good idea. Um, so I have like a year. So it's not like I was in a hurry to do anything. So, um,
00:23:25
Speaker
And that's what I ended up doing. So it was me, five Dutch guys, and this another woman who was also European, but she'd been living in South Africa. Her name was Dana. His name was Rudy. There were six of them. So anyway, seven of us started in Amsterdam on a cold, rainy, jaggery model. And pretty much we drove all the way from Amsterdam through Europe.
00:23:52
Speaker
into Morocco. It was an interesting trip. Obviously we were camping and six weeks of, you know, six, seven, six or eight weeks, I don't remember, of sort of being in the desert, right? So it's like you're camping or cooking, et cetera. But probably the most interesting thing that happened even more than crossing the desert was that Dana and I ended up falling in love and
00:24:17
Speaker
We've been married for 20 years now. That's some story. I mean, when people ask you how you met. I usually don't like telling the story because after I tell the story, then the other stories, other people don't like to tell their stories. But it was quite an interesting story, obviously, with all kinds of adventures in the middle.
00:24:48
Speaker
But then after we met in thing, then I wanted to travel alone, not even with her. So I spent another two, three months alone in West Africa, which is one of the roughest places in the world to travel. It's hard, it's poor, you know, it's crazy. West Africa includes which countries? Senegal, Mali, Zambia, you know.
00:25:11
Speaker
I mean, countries which are not like touristy countries, right? So this is not like Kenya, which I've been to before, that's what kind of gave me the taste of it. So I've been to Kenya, Zambia, Zimbabwe, and all those kind of places, which is somewhat touristy. This is like, there's no tourism, this is like just, you know, poverty. Yeah, you're going like the middle of Bihar, you know, you're traveling by yourself, by solo, right?
00:25:36
Speaker
Carrying all cash. There's no credit card. There's no nothing works. Okay Did you feel threatened ever during that trip never never okay, yeah I mean I was really alone and you know, you're like sleeping in railway stations. It was like really rough right travel like you're the middle of like nowhere
00:26:02
Speaker
And only French, right? There's no English, nothing, right? No language. It was interesting, obviously. So by this time, obviously, my profile of taking risk was very, very high. Like, OK, let's go. Jumping, let's jump, right? It was kind of like that. Yeah, I mean, when you can play with your life, then playing with career, playing with money is all a friendly secondary. Exactly.
00:26:33
Speaker
And so then I came back to the Valley a year later, in 98. And I did my second own startup and the third startup. So one question about Africa, was there some sort of self-discovery, some insight, something which happened during that Africa trip? There was several.
00:27:03
Speaker
in the sense that when you're by yourself for a long time and you're dealing with all kinds of unknowns, right? So you're pretty much sort of very much like into like, let's deal with it, right? And I can deal with anything kind of. It was a little bit of that. Along the lines of what you said, if I can take this, I can deal with anything.
00:27:33
Speaker
Okay. Okay. And also somewhat take life as it goes, right? It was a very dramatic set of events. I'm skipping a few events that happened also in the middle, but all kinds of crazy stuff happened. Like what? You know, all kinds of shit happens. So, so the, so you're very much, you know, resilient in some ways. I mean, I'm, I'm paraphrasing now, obviously, you know, what were some of these things that happened? Like, Oh, all kinds of stuff, right? I mean,
00:28:03
Speaker
you know, things would break down, right? I mean, I would be stuck in like a very remote place, right? Like, you know, like, for example, you know, I was like kind of, I was alone. I was in a very small village. I mean, think of some tiniest village you can think of, right? And I had to go and cross the border of a country. I don't remember which one anymore. So I'm going from one country to another, but basically one village on this side to another village on the other side.
00:28:32
Speaker
And the distance is not much. It was like some 30 kilometers or something. But I can't walk it. So I had to sort of travel. And there are no buses or anything. But they had these sort of, what we also have in India, this little pickup trucks kind of thing. If you go to real small places, they'll be like, there won't be buses, but they'll be a pickup truck. They go by Indira. My Indira type of thing. And the way it would work is basically when they fill up, they go.
00:29:06
Speaker
So I said, I was waiting, for example, you know, then there's no timing. Like you show up in a tee shop at eight o'clock and you sit and wait. People are showing up. So remember one thing when I was like sitting at eight o'clock and waiting and waiting, I wanted to go to the other place by, by evening, by afternoon, ideally, right? It was only 30 kilometers. But after like, you know,
00:29:31
Speaker
three hours, right? There are like three people. Like I'm not meeting until there are like, at least 10 people. I'm like, guys, you know, it's not gonna happen, right? Like, why don't we pitch in and pay for like the 10? And everybody was like shocked. I mean, obviously, the amount is very tiny amount, right? We're talking about some pigeons.
00:29:53
Speaker
and I had sold the company so I had the money but obviously these guys are like no money and I also didn't want to like open up my wall of cash and you know that would be not like a thing to do. At one o'clock you know there's nobody showing up and all these guys are lighting fires and like planning to settle down for the night.
00:30:11
Speaker
guys, what are you doing? You know, let's go. Finally, you know, people are there. Anyway, I end up personally paying for everybody. And in the middle, I'm like, you know, I'm like, okay, you know, screw you guys, I'm going to walk, right? I'm like, that's stupid. Like, what are you doing? That gives for now. Fuck you. I'm going to walk. So I started walking in a few kilometers. Obviously, it's like a desert. I'm like, okay, that's like a dump.
00:30:36
Speaker
And I'm like, yeah, I told you. Anyway, a few hours of this, and I sort of paid the remaining fare for everybody else. I said, I'll pay. They're all like, shop, they're saying, what are you doing? You know, you're like crazy. You should not be doing this. And I said, you have to go across the border. So anyway, we go to the border. And the border, that guy is like, who are you? Because I have an Indian passport. And they've never seen an Indian passport. It's not like a passport or something.
00:31:05
Speaker
Anyway, all kinds of crazy stuff. So we cross the border. We go to the other side. And obviously, the other side, there's nobody else either. It's the same crowd that has to go to the other village. And they are like, OK, there's nobody who's going to come. So it's a stay here for the night. I'm like, are you crazy now? We can't stay here. There's nothing. I have nothing to sleep on. I'm in the middle of nowhere.
00:31:29
Speaker
Another long argument anyway. Same argument, same people. I'm like, guys, why don't you pay? Because nothing is going to happen. They're here. And they're like, that's OK. And what's the big deal in life? What's the hurry? We all don't understand why you're going to the village, because there's nothing in the village. It's not like you're going to see Niagara Falls or something on the other side.
00:31:52
Speaker
You're just going there. So anyway, you get a number of crazy things like this, where you're dealing with situations. But if you view it as a sense of adventure, then it's adventure. If you're like, man, I have to go somewhere, then it's a massive annoyance.
00:32:17
Speaker
perspective shift happened of not focusing on the destination, but the journey. That's right. Exactly. I mean, literally in this case, you know, and the whole of West Africa is kind of like that because there is no destination, right? Even 20 years later, if someone people ask me, where should I go, right? You know, in that place, tell me like a spot.
00:32:38
Speaker
There is no spot, I mean, I can maybe Timbuktu is one place, but there is no other place I can tell you, which is like beautiful or mountain or waterfall or market, anything. I mean, there are a lot of markets and stuff, but it is all, it's just there. It was like a journal is really a journey where there's no particular destination, but the experience is the effect.
00:33:08
Speaker
A little bit like that. So anyway, I came back to the US, and this was 98. And so by 98, of course, you know, the startup boom was full stream in the valley, right? It was a dot com era. And so obviously, I wanted to roll the dice and start a company. But I didn't have an idea in mind.
00:33:37
Speaker
And there were sort of lots of sort of groups of people without any idea like wanting to start companies. I just want to start a company kind of thing. So there was one such group, which is basically one of them was my close friend, another couple of guys. And we said, okay, let's just brainstorm ideas. So let's just sit in a coffee shop and
00:34:03
Speaker
You know, like, you know, why don't we sell fridge doors? You know, why don't we sell like whiteboards online? Everything was online. Right. Yeah. It was e-commerce of some sort. Like what about us are calm. You know, people are always sending socks. So that idea was taken. You know, you could sell puppets, you know, just literally think of something and then.com. Right. If you really go and search for the domain.
00:34:32
Speaker
So obviously most of the ideas were like really stupid. But what happened I think after a few months of this was that the pressure of wanting to start a company became too much. Fairly smart guys, two other, so I was from IIT, two other guys from IIT. One guy had gone to IIT, went to Harvard, MBA from McKinsey.
00:34:58
Speaker
And these guys, the three of them had also sold a company just like I had done. They were all like second time entrepreneurs, fairly loaded from that financial standpoint, very pedigree. So we could
00:35:15
Speaker
or attract, like, you know, we could walk into VCs offices also. But we didn't have an idea. So anyway, six months later, we can a lot of this, there's a lot of pressure to start a company like what are you guys doing in our product, you can only bring in some like so many ideas. Let's start something, you know, like that.
00:35:39
Speaker
So we finally came up with an idea, which was the company was called I select.
Success with Snapfish
00:35:47
Speaker
Okay. I select was the name of the company. And the idea was essentially what is now like urban clap. Okay. Right. That was the basic idea, but this is all in the US more Silicon Valley. So anyway,
00:36:08
Speaker
So long story short, we did some seed funding, but we shut down the company in about six months. Why was that? Yeah. So there are a lot of reasons. So the idea itself was probably way ahead of its times at that time.
00:36:32
Speaker
There are a lot of sort of holes in the idea. Again, I'm giving you sort of a retrospect kind of story. But the biggest problem was that we couldn't get along as a team. It was a little bit of an arranged marriage. We had some friends, but I was not really close to all of them. I knew only one of them really well. And the combination of the idea, not like catching on fire.
00:36:58
Speaker
And the fact that we couldn't get along as a team. So it was pretty much a total disaster. So all the seed funding was gone. And we had to shut the company down because we couldn't work together. And in my book, that's one of the worst ways to waste your investor money.
00:37:24
Speaker
And as an investor later on, I'm super sensitive to that point. One thing, you tried and you failed. Business did not take off. Customers did not like your product. But there are a lot of reasons to fail, which are in my mind, quote unquote, legitimate. But what is not cool is that you guys can't get along. And you didn't know that before.
00:37:51
Speaker
Yeah, right. Right. And you discovered it like six months later. Was it like no shared vision? Everyone had a different vision for what to do? Or was it like? Yeah, different vision. Like a CEO designate who could pull this together? There was a CEO designate, but we didn't like him. That was the problem. Otherwise, I think we could have probably managed.
00:38:19
Speaker
And it was just like a bad dynamic, right? It was testosterone. And this is going to work became like toxic. Okay. So basically, you know, just if you could like, you know, it's your company, but you just don't feel like going to work. Yeah, yeah. By the time we had the higher team, I was like some 50, 30, 30 or 40. I don't know how many people but 30 plus people for sure, probably 50 people.
00:38:49
Speaker
So who all believed in our vision that we sold them. And we couldn't get along. Even as we're hiring, we knew we couldn't get along with each other. And again, I'm not blaming one person on this. I was also somewhat immature in all of this. But huge learning, obviously, is not to do that again, ever.
00:39:17
Speaker
So that was like a really bad experience. But in some sense, it was good that one of the best decisions I probably made was to shut down the company or want to shut down the company. Because to stick around and do that for years would have been like a personal disaster and probably a professional disaster as well. So the right thing to do was to actually shut that company down, which is what we did.
00:39:47
Speaker
In the meanwhile, there was another group, which I was telling a group of people ideating. Another group of people actually had an idea, which seemed much more interesting. And a very close friend of mine from IIT was one of them and a couple of other guys. So they had been ideating on an, they also didn't have like a preset passion. But they also wanted to sell a company. All the three of them had gone to Harvard.
00:40:16
Speaker
And my friend went to IIT, and went to Stanford, and went to Harvard. So my friend's name was Shripati, Shripati Acharya. And I liked the guys. I liked all of them. And I had just come from experience of having back founders.
00:40:38
Speaker
I really liked them, and I broadly liked the idea. I didn't do too much research on it. But I said, what, let's do this company. So this bad company experience lasted maybe a year until I joined, we started this company. Which was Snapfish. Yeah. So this company obviously is a huge success. You've got a Snapfish. And so there were four of us founders.
00:41:05
Speaker
And I just got in when they come up with the basic idea and I just came in like that office San Francisco And this was like a real dot-com, right? So we raised like some 40 million dollars 30 30 30 40 million dollars on a PowerPoint What was the original idea of snapfish that you had in your deck based on which you raised the funds? Sure so the
00:41:35
Speaker
The pitch deck basically opened with saying kill Kodak. That was an opening line. You know, Silicon Valley type of people, um, the idea of, uh, so this is the digital cameras had not yet come. Yeah. It was the internet, but no digital cameras. Um, it was the first cameras just started to come out and the camera was like $3,000. Right. So Kodak was like the.
00:42:03
Speaker
the king Kodak had been around for like 150 years, 100 years. Basically what it does is Kodak sells film, Kodak sells film cameras, Kodak sells the chemicals to process the film and then the paper to process the chemicals. And you get prints in photo stores and retail stores and so on and so forth. And you know,
00:42:31
Speaker
repeat right so you can more take photos so they were like photos means Kodak right the Kodak moment and they were like a yeah they were like a company iconic company Eastman Kodak but what had just happened was that digital cameras were just starting to come in but it was still a very much a toy right it was very high end uh the quality was very poor right the best camera it was like one megapixel wow okay um for like three thousand dollars some x
00:42:59
Speaker
absurdly expensive camera. But the industry was kind of talking about it. Hey, no digital cameras, but obviously nobody took it seriously. The way people are talking about self-driving cars today. Exactly. Exactly. Exactly. Very much like self-driving cars now. Exotic, someday, sounds like it should happen logically, but
00:43:23
Speaker
And who knows? There'll be other issues, memory, and all this, that everybody had questions. But because it was a dot-com boom, there are already 120 startups, which were all taking photos from the digital camera and uploading it. So even this few hobby people who bought the digital camera. So they would take the photos, and these guys would upload the photos. And then you can share it, and so on and so forth.
00:43:52
Speaker
So our idea was, eventually digital camera might happen, but today people have film cameras. So why don't we take people's film roles, digitize them, like scan the film, and then put it on the internet. And then they can share them. And they can still use photos or print or whatever, but we are bringing them digital. That was our angle to this.
00:44:24
Speaker
And as we did the research, we realized that the people who actually take photos in America were women. And not only women, but mothers. So pretty much young mothers are the ones who take photos. There's also other categories like travelers and so on and so forth. But the ones who took the most number of photos, because travel you do once a year or something, vacation.
00:44:51
Speaker
But the ones who take into the volume of photos taken is the young mothers. So we decided that the target audience was young mom. The business idea was to
00:45:06
Speaker
let them take photos on film. And then we would digitize it and put it back on the internet. From where they could download it and share it. And then they could download it. We'd also send them the roles, the film back, and the prints. So they have a copy of that. And then they could share it. So this was basically the core of the idea.
00:45:32
Speaker
Now, the ironic thing, of course, was that there are four sort of Indian guys, two of them from India and two others who are like Indian Americans. And our target audience was like some white mom. And we were all single at that time as well. Most of us are just married or something. So we had no idea what this mom was. But the business was very clear. It was not about us.
00:45:58
Speaker
Because we were all sort of business guys, especially three guys with an MBA. They were very clear. We're not the customer. The customer is somebody else. We're not designing something that we would use. We're designing somebody else who would use. So again, fast forward a little bit. A lot of stuff happened. But obviously, the film cameras died much faster than we thought. So 1998, there were hardly anybody with film cameras. By 2001, everybody was using digital cameras because electronics
00:46:27
Speaker
really brought the price down. It was still expensive. It was still like $1,500 for a two megapixel camera. But digital cameras sort of started taking off. Because China was manufacturing it, and it was just an electronic manufacturing problem.
00:46:50
Speaker
Um, but we were one, so then the.com crash happened. So a lot of stuff happened obviously in 2000 in 2001, right? When we launched the product, you know, personally for me, I had twin babies, 10 days. I married Dana. We had like twin daughters, right? Right in the middle of my startup. Um, super cool. Um, and then 9 11 happened. Right. Nine. They will nearly killed our business because.
00:47:21
Speaker
you know, we were still film based at that point. And all the roles of film was coming from a factory. And the scanning was done at a factory in Washington DC. And this anthrax scare where basically they wanted to put all these X-ray machines in all the so that somebody was shipping anthrax is like a poison. And the government wanted to basically this immediately after 9-11. Like a little mini scare that somebody which
00:47:51
Speaker
you know, mailing poison. And so the US Postal Service wanted to like put x-ray emissions on all the thing, which should have basically killed our business. Okay, the x-ray would have spoiled the negatives. Exactly. So anyway, lots of things like this. But 9-11 itself, you know, all the dot com bust happened, right? All the but luckily, we had raised the money before. Right. So almost all our competitors went out of business. Okay, because
00:48:18
Speaker
there were two reliant on digital cameras, which had not yet taken off. And we were just, because we were using film and we kind of survived, we were able to sort of survive to tell the story. And then when the digital cameras took off, right, we kind of morphed the business into a digital printing business, like basically would upload your pictures and take prints. So 20 years later, so in 2005, we got bought by Hewlett Packard,
00:48:48
Speaker
So for about 300 million dollars and in the middle And then we started also powering white labeling our site to Walmart for example, so even their Walmart photos is powered by snapfish Walgreens is powered by snapfish. So And in addition to our own business so snapfish.com you can go check out snapfish.com. It's one of the very few
00:49:16
Speaker
websites that were started in the year 2000 that you can still write in www.nafesh.com and then you'll see a website.
00:49:25
Speaker
Almost no brand existed, no brand continued. Companies did not continue. Most of the companies died. I'm super proud of the fact that I signed a company and 20 years later I can tell you to go to a website. But it's still meaning it. Snapfish is still a very big business.
00:49:48
Speaker
It's a little bit of a niche play now, right? But you can go to snapfish.com. Why the decision to sell to HP? They offered us a lot of money. Okay. But like, what were the dynamics around that? Like, if you like, thought that this can become like a billion dollar unicorn or something, you may have felt that this was not enough money or like, like, what was it? We're not sure. We're not sure that it would become a
00:50:18
Speaker
billion dollar unicorn mainly because we were not sure if people would print forever. So we didn't know what the behavior would be and so it happened that the people stopped printing so much. They do other things, it's still a good business, it's a little bit of a niche business.
00:50:40
Speaker
HP, which was a big imprinting, came and offered, made a good offer. Yeah, for HP, it fit into their product line. Okay, got it. So, so we started essentially launched the company in April 2000. It started in 99. So I stayed on. And my personal career had a big switch when HP bought us. So I used to be a techie. I was, you know, I remember I was a programmer and all of that.
00:51:11
Speaker
Uh, and I was the CTO until it bought us. Um, and then I switched and I decided I wanted to do a, be a business guy. So I personally went and started snapfish in Australia. Um, then in a number of countries in Europe, we did an acquisition in Europe. So at one point I was managing snapfish international in about 20 countries. Okay. Okay. Okay. Yeah. I launched like multiple countries.
00:51:40
Speaker
Again, it goes a little bit with my personal passion of traveling. My wife is even bigger traveler than I am. So there's always that thread of adventure going into the unknown. And my wife and I would take kids and drag our kids everywhere from Cuba to all kinds of crazy places in Africa and everywhere. So even though we had newborn kids and young, it didn't matter. Even though I was doing a startup, it kind of was a very big part of life.
00:52:12
Speaker
I had also got interested in other passions, like I started getting into trekking. I do a lot of scuba diving at that time. So a fair amount of that kind of skiing, I still ski a lot. So a fair amount of other kind of interests which are outdoors besides just doing a startup. But all of those are kind of intertwined in some ways in the sense of taking risks, going out there and putting yourself out there a little bit.
00:52:41
Speaker
In 2007, I was running the international business. The travel was getting hard. And by this time, I had lived in the US for 17 years. My wife is European, so she had been there only for like seven years. And my dad just passed away a year back to Dubai. He had a brain tumor.
00:53:04
Speaker
in 2006. And in 2007, we decided, hey, why not move to India for a couple of years. So obviously, you know, our kids were six years old. You know, I had all my friends and my life was obviously in the US, right? I mean, that's a family here, my mother was here, but my mother was alone, I thought, okay, Chalo, you know, maybe it's a good time to spend a couple of years in India.
00:53:30
Speaker
And that's what we did. Didn't you feel it would be a compromise for your kids? I mean, growing up in US versus growing up in India? Yeah. So when we came first, we thought we'd stay for a couple of years. We thought, OK, Chalo, it's like they're young enough that it'll be live and adventure for them. So we moved to Bangalore in 2007.
00:54:00
Speaker
And it was very complicated because my wife is not Indian. And obviously, I never lived in Bangalore. I've been to Bangalore a couple of times, but never lived. I'm not a Bangaloreian. And there was really no particular reason for me to be in Bangalore in the sense that HP, by the time I was part of HP, HP didn't care where you want to be. So they were just kind of humoring me and said, all right, cello, if you want to.
00:54:26
Speaker
in Bangalore. We can be in Singapore, we can be in Bangalore. It's not like they wanted me to go. So we just thought it'll be a little bit of an adventure, Chalo. Why not try something? We live in the valley. I knew how Silicon Valley was like. So my friends all thought and still think that I'll be back in a couple of years.
00:54:49
Speaker
So anyway, long story short, obviously, two years has become probably going to come to 20 years. So it's not 15, 12, 14 years now. And was it hard to kind of settle into India after seeing the best in class lifestyle, so to say?
00:55:17
Speaker
Yeah, so we lived in Bangalore, you know, in a gated community. It was not that hard from that point of view. Right. And professionally, I was still mostly running a global business. So I didn't have to interact too much with, you know, getting my hands with the locals so much. So the first couple of years was like a really honeymoon in some ways.
00:55:40
Speaker
But what really clinched it for us was the kids really loved it. Kids loved the school. We made some good friends. And in 2009, late 2009, I had the good fortune of meeting Nandan, Nandan Milakani.
Involvement with Aadhaar
00:55:58
Speaker
I've been at Snapfish for 10 years now and built the business and the business was doing very well. We're doing about a billion dollars in GTV and about
00:56:10
Speaker
Everybody was happy. It was a good situation. It was growing like crazy. We had launched in 20 countries. It was kind of a good time. So somebody at the Bangalore connection had told me that Nandan Nilakani is launching this biometric ID program. Manmohan Singh had just given him a cabinet position to go do something with a biometric ID. But it was very vague. Literally, that was the mandate. That's it. Biometric ID.
00:56:38
Speaker
Now, Nandan being who he is, you know, super charismatic, he got together a bunch of very, very bright people.
00:56:49
Speaker
including people like Pramod Varma, who's the chief technology officer of pretty much, of UPI. He built the PSG network. Kuchrikan Nadmuni was amazing guy. So a number of like really bright people, what, five, 10 people.
00:57:11
Speaker
And he had already gotten, which I didn't, I didn't know at the time, I knew them a little bit later, but I went to his house to say, Hey, you know, I've been back. I've been, I mean, I've done all of this. Like, you know, what should I do in lifetimes? Okay. So I walked out of his house with a resignation letter to HP. That like, I should not be like wasting my life and I should like do something for the country.
00:57:36
Speaker
So I quit HP, which was crazy, you know, like a seven-figure salary and then all kinds of perks and obviously the growing business to join Adar. Adar was really a startup in every sense of the word. We didn't even have an office, right? So she went to an apartment in Bangalore. And, you know, the
00:58:00
Speaker
But it was a bunch of amazing people, including Mr. Arash Sharma, who's chairman of TRI right now. Book on this topic. I met him on his first day. He walked into an apartment thinking, what is going on here? Supposed to be a government program. And you guys are like, what are you doing?
00:58:23
Speaker
Very Delhi, you know, you know, a bunch of very, very bright offices from Delhi and a bunch of bright people from Bangalore, right? It was like a, you know, but in, you know, it was like, you know, yin and yang in some ways. So this was the birth of Adar and literally in the in the first meeting, Nandan basically looked at everybody and said, we're going to do, you know, 50 crore Adar in five years, he just picked a number, 50 crores in five years.
00:58:50
Speaker
And this is before anything. There was no organization, no government, nothing, no staffing, no technology, nothing. And everybody looked at him thinking he must be crazy.
00:59:04
Speaker
So anyway, so that was the next phase, which, uh, which was again, I was really lucky to be a part of you were here as like an unpaid volunteer. Okay. Most of the people from the tech side were like unpaid volunteers. Yeah. We're all unpaid volunteers. So that was nothing genius in like convincing a bunch of people to put their jobs and become unpaid. They still don't understand. They think, why did you want to do this? You must have some ulterior motive because people don't.
00:59:32
Speaker
do that. And it was difficult because cultures are very difficult. Working styles are very different. But I did definitely get grounded to India pretty quickly. And some amazing entrepreneurs came out of this, a company called Healthify, who I sit on the board of. They're called Tushar. He was here. He was part of my team.
01:00:02
Speaker
So there are a bunch of very bright people who are all passionate for the cause. So kind of charged up, just like a country building kind of a thing. But it was definitely for me a very grounding experience of getting out of the bubble.
01:00:16
Speaker
and traveling to Chhattisgarh in all kinds of remote places everywhere. Tell me about how that idea got shaped up in that one year which you spent over there. I spent a couple of years there. I spent about two years there. So there are many threads here, but again, I was a small part
01:00:41
Speaker
great project. So my role was, you know, as a volunteer, but as help out wherever I can kind of a role.
01:00:52
Speaker
I mean, the idea was shaped up by it was a collective effort from extremely dedicated, you know, IIS officers who have never seen any startups, entrepreneur work like that before or after, who work for nothing. You know, there's not like they had any personal gain out of this. And a bunch of very, very bright people.
01:01:16
Speaker
Essentially, everybody shaped together from the idea of should we use fingerprints, should we use DNA, should we use, how do you create a unique ID?
01:01:25
Speaker
Right. You know, how do you store it? How do you, you know, should it be done by the agency? Should it be done by private company? Who should run it? Who should manage it? How do you develop software? Right. I mean, it's just like everything, right? You know, how do you do RFPs? But was it clear that you were building a platform rather than just an ID? Like, like this would be something. Yes, it was really a platform. And then crystal clear on the vision of it. Right.
01:01:53
Speaker
And I've never met anybody like him in my life, in terms of his vision, in terms of his dedication, in terms of his work ethic. I mean, he would work from 7 a.m. to 7 p.m., deal with minor, from detailed minutiae of tech issues to policy to home ministry to all kinds of stuff. In launching something like this, it was really like a breathtaking
01:02:20
Speaker
Audacity, honestly, to be able to think that you can go and issue a biometric ID electronically. Remember, this 3G had not even come in yet. 3G was coming in. And people thought there will be no network connectivity. What are you talking about? Online ID. And E was like, don't worry. We are building for the future. It will come. So this is amazing, the number of strategic decisions, tactical decisions, the range of decisions that was made.
01:02:49
Speaker
So I think that was, to me, it was a very life changing experience in a lot of ways. Also, to sort of get reoriented to India, because I've been out of India for 20 years at this point. From the days of, you know, running around and doing market research and, you know, driving around buses and walking around to, you know, the new India, right? The whole generation had grown up. Post liberalization. People who didn't know what I was talking about, they couldn't relate to anything that I grew up with.
01:03:20
Speaker
and still work. But it was different. I loved it personally. I thought it was a much better place to live and grow up than what I had grown up with. It was really a new country in a lot of ways and a serious upgrade, I would say. So it was really fascinating how the next generation thing, most of the volunteers are very young. They're all like 20
01:03:44
Speaker
Right? So it was very fascinating how a whole set of people, how their assumptions are very different, their ambitions are very different. And interacting with all of them basically gave me the thread of wanting to do what to do next. And so this is where my co-founder from Snapfish, the guy I told you about, Shivati, who also one of my close friends, he had also moved to India.
01:04:15
Speaker
along with me. He was my neighbor. He was also at UID with me at Adhar. And he and I, along with Sanjay Swami, who was also a neighbor, we also volunteered at Adhar. We came up with the idea of starting a venture capital fund. So the fund is now called Prime Ventures. At that time it was called Angel Prime.
Founding Prime Ventures and Beyond
01:04:39
Speaker
And so Prime today is the largest seed fund in India. $130 million AUL. And at that time, the idea was we knew that there will be a bunch of exciting startups which would come from India. But having done startups, et cetera, we wanted to sort of be somewhat deeply involved, not only as investors, but also sort of help the entrepreneurs as well.
01:05:09
Speaker
We felt that that was the entrepreneurial ecosystem needed. And that was the genesis of money tap. Sorry, genesis of primary. So we raised money from a number of Silicon Valley people, including people like Jerry and who had started Yahoo. And so
01:05:33
Speaker
We did a bunch of companies from 2012 to 2015. Can you explain to me how a VC works from the VC's perspective? Like I believe there's like fund one, fund two, fund three and all that. So how does that happen? Like you create one fund with a certain objective and a certain money which is in your account or is it like when you want to deploy then that money comes in? Like how does it work? Good question.
01:06:01
Speaker
So the way it works is that there is something called fund one, fund two, et cetera. So the investment thesis, as you call it, like what are you going to invest? Are you going to invest in technology? Are you going to invest in non-profits? Are you going to invest in clean energy? You could pick whatever charter it is. That usually doesn't change across funds. So you have an idea. Prime, for example, is to invest in early-stage startups.
01:06:26
Speaker
and be sort of very heavily involved in the growth of the startup. As opposed to, for example, invest a little bit of money in a lot of startups, but not be so involved. That's another thesis. There's nothing right or wrong, but everybody has to pick a thesis. It's called a thesis. But other than that, it stays across, typically across multiple funds. But typically you raise fund one, the first fund,
01:06:52
Speaker
with a bunch of what they call LPs. LPs are limited partners. See, these are people who are writing a check. They could be funds. They could be endowments. They could be family offices. There could be a number of people. So they essentially write a check. And the money sits in your bank. Actually, they commit to writing a check. They make a commitment. And it's a pretty strong commitment.
01:07:21
Speaker
and then you can call on the commitment saying hey you committed you know write me a check now so typically you you can call for every every few months or every six months okay based on opportunities that you identify where you want to invest in but not like every opportunity you'll have a little bit of a reserve but not too much reserve there's no point having money and sitting in the bank and that's generally considered bad practice right you call
01:07:44
Speaker
Approximate even is necessary, but not in the last minute. But do you call proportionately from all the LPs or you pick and choose? Okay, let's call. No, no, proportionally from all the LPs. So, and the money comes to your bank and then you write a check from that company so that each fund is a company in some ways.
01:08:05
Speaker
You write the money from the company into the company you want to invest. The fundraise itself is like a sales activity where you have to sell your ability to identify startups. Yes, exactly. And do you put in your own money also? You need to put in a small amount of your money.
01:08:30
Speaker
Anyway, so that's how broadly it works. And it's fairly established. There is no, for an industry which is innovation focused, there is no innovation here. This is very standard formula almost. What commission you get, all of that is very standard. It's very conservative. They don't change that. So what does the partners of the VC, what do they get? Like if they do a good job?
01:08:56
Speaker
So again, this is no secret. It's very common. So the typical is what they call 2 and 20. So if you raise, let's say, $100 million fund, you get 2% a year in what they call management fees. So this is for the salaries you pay the partners and office and any marketing activity you need to do. Analysts and all that. Analysts and et cetera, exactly.
01:09:22
Speaker
paying your office and all of that. So that's usually 2% of the fund. And 20% is what they call carry. So carry is, let's say you invest $100 million and you get like a jackpot and invest in a Paytm or something and SoftBank buys you or whatever. You have an IPO or whatever, something good happens. Let's say the $100 million becomes $300 million. So first of all, you have to return that $100 million.
01:09:52
Speaker
first right we took out of the remaining 200 million you typically get 20% okay okay and that shared among farmers okay okay got it fairly standard structures 220 across the world at most
01:10:11
Speaker
it might become one, if it's a very large fund, it might be 1%, but it's broadly in that range. Okay. And what were some of the companies that you were funding and, you know, like any thesis you developed based on those years of investing in companies and seeing what's working and what's not? Yeah. So we invested in a number of companies.
01:10:35
Speaker
So there's a company called EasyTap, which is a payment company, a company called Happy, which is also into FinTech. It's a company called Nimble, which is now called Vagal. There are a number of companies. In the very first fund, the world was only moving towards FinTech. So there was like a little bit of a waiting on FinTech. And that was sort of what got me interested in FinTech.
01:11:05
Speaker
In looking at this, I was very intrigued by what was happening in the finance industry. So after two, three years in the fund, I sort of felt like there was a very big opportunity in FinTech. And so after the fund won, I left the fund.
01:11:28
Speaker
So I'm not a partner in fund two, for example.
Creating MoneyTap
01:11:33
Speaker
And I started MoneyTap. So MoneyTap is the next phase of the journey. Again, somewhat very unusual thing to do because if you are close to 50 at the time, 49, you don't start a company when you don't need to.
01:11:53
Speaker
not like a drive to make money or whatever. And this fund itself was doing really well. Prime was doing really well. I was with my best friends. It was a really good setup. But I sort of felt like I had one more adventure left in my career. And this opportunity, it seemed like an interesting opportunity.
01:12:27
Speaker
But I also sort of knew that given my co-founder experience in the past, etc., that I needed to have the right set of founders because this was going to be a long-term play. It's going to be like a 10, 20 year kind of a play.
01:12:42
Speaker
So luckily for me, I met Kunal and Anuj, two co-founders, who just exited a company. And I was sitting on the board of one of Anuj's brothers' company. So I had some idea about who they were and what they were doing. And they were really smart guys.
01:13:05
Speaker
And I had sort of a basis of an idea about what is now MoneyTap. But it was not fully formed yet. And we had not started a company or anything. But I told my partners at Prime that I'm leaving to start this. Of course, they weren't funded. They're still a big investor in MoneyTap. But that's how sort of the next chapter started, which is basically MoneyTap.
01:13:34
Speaker
So my original idea that you had in your mind.
01:13:39
Speaker
Yeah, so the original idea is pretty close to the idea that we still have right now, is basically, I'd done a whole bunch of, because from my other days, I'd done a bunch of studies and I was looking at a bunch of data. A few things are very clear, obviously in 2015, when we incorporated the company, GEO we knew was coming at some point of time.
01:14:06
Speaker
right, with the high bandwidth. So network speed, we knew that would not be an issue. And if you recall, in 2013, it was a major issue, right? Yeah, yeah. Like, you know, we were having edge network and 3G, and it was expensive, like, to slow and nobody had broadband at home. And it was like, the world was not there. But because in my time in Aadhaar, I'd gotten to meet a number of these, you know, the CEO of Airtel, a number of people like that.
01:14:33
Speaker
like we knew what the plans were like they were you know laying fiber everywhere in the country so even today your life kind of was bad we knew that this will change so much fiber is being laid you know that
01:14:46
Speaker
This will change. Plus, already other countries have gotten there. And so we knew that we would have not those issues. But we did know. So with that, and also the credit bureaus were becoming very stronger. So I had met some of them as well. OK. We knew that we could use data. And we knew that credit card was under-penetrated in India, severely. At that time, there were like some 20 million credit cards in India, 20 million.
01:15:12
Speaker
Yeah. Even if you were people using credit cards, their credit card interest rates were exorbitant, still are exorbitant. Right. So the idea was that, and but yet credit card is the most popular product in the world financially by, by like a mile, right? If you go around the world and say, what is the most successful consumer product, financial product? It's credit card, like a hand down, right? It's an ecosystem, giant companies have been built on it, right? From VSCAR and MasterCard to everybody else.
01:15:42
Speaker
In India, it didn't make sense that it was poorly penetrated So we knew that there'll be a mobile version of a credit card of some sort, right? We knew UPI was coming because again the connection with other and everything. So we knew it was coming, right? We know it'll come like, you know, six months later or 12 months later, but we knew it'll come like in the next three years, right? It was like that And we knew bandwidth would be very available But other than that, it's not like I had some proprietary knowledge of UPI or something
01:16:10
Speaker
It's not like I had those are all open public whatever everybody else knew I also knew but we knew that these trends were like in the right direction and the idea was to provide sort of flexible credit to consumers.
01:16:25
Speaker
That was the idea, because that's what a credit card does. It's like a flexible credit. So Kunal, Anuj, and I, we interviewed probably over 1,000 customers before incorporating the company. We would stand in bus stops and malls and talk to people and go to textile factories and say, what do you want? And out of that came the idea that on an app, if you can fairly easily evaluate somebody for credit,
01:16:52
Speaker
And then if you give a line of credit, which is a credit limit, that you could use very flexibly, you could use borrow for three months that you could borrow for three years, you could pay in EMIs, you could borrow 5000 rupees, or you could borrow 50,000 rupees. As long as we could provide some reasonable interest rate,
01:17:14
Speaker
Very flexible. You could use it like a swipe in a card, in a machine, or you could use it as cash. Or you could use it as a API later on. That came later. As long as you go with flexible ways of spending money, flexible ways of borrowing money, and flexibility in repaying. For a small ticket, not like 5 lakhs or 10 lakhs, but average today is about 1 lakh.
01:17:44
Speaker
and within that people borrow like 10,000, 50,000, 20,000, average borrowing, this was about 30,000. So that's how money backwards. It's an app, you can download it available in like eight languages. And once you get qualified for a limit, then you don't need to use it if you don't want it to borrow money. But whenever you want, you press a button and the money is there in your bank account.
01:18:10
Speaker
That's the idea. And very fortunately for us, we met some really bright bankers. We met RBL bank, which is a terrific banking partner because you need Indian financials, you need a bank as well to back you up.
01:18:28
Speaker
Right. And we met one of the probably I would say to even today, one of the best bankers I've ever met in my life. Yeah. Advil bank. Advil also works with a lot of startups, fintech startups, I think. Advil is very innovative from that point of view. We were sort of lucky to meet them, especially one of the best planes and and some of the idea, ideation, gelling came from them as well.
01:18:53
Speaker
So which also validated saying that it's real because we didn't know anything about the finance industry. None of us are from the industry. So it was kind of a marriage between banking and tech. And to this day, we are probably one of the most successful partners for RBL startup. We show up in their annual reports. So we have excellent relationship with them even now for five years.
01:19:18
Speaker
very hard to make a work with a bank also. It's not easy for the startup to work with a bank. So five years out, so we launched the product about four years ago. The product is obviously a huge success. We have disbursed more than half a billion dollars.
01:19:35
Speaker
of money, of loans. Is this your own money? Or do you pass on the leads to various banks? How do you disburse this money? So we don't pass on the leads. It's not our money. We manage the customer experience, but the loans agreement is signed with the enablers.
01:20:05
Speaker
The loan agreement is signed with the bank or the NBFC. Now we have our own NBFC license as well. So now we also lend some of our money. So depending on the algorithm will determine who's the lender.
01:20:20
Speaker
I have only been RBL till now, right? RBL is a major bank lender. We have a number of people now, a number of NBFCs. So each NBFC has a certain risk profile basis which you match them with the customer.
01:20:38
Speaker
But so once a customer is matched to an NBFC, then that customer, whether he takes another 50,000 or pays back, that whole relationship is with that NBFC in terms of the credit limit increasing, going down and all that, except it happens through your app. It happens through our app. We have the conduit. They are the legal entity.
01:21:02
Speaker
What are the enablers and the conduits? When you launched it initially, how did you do the customer acquisition? I mean, the supply side, obviously you found RBL as one major partner and which you grew with other NBFC partners, but what about the demand side? How did you get customers to download and apply for a credit limit?
01:21:25
Speaker
So that turned out to be not that difficult a problem, because by the time people were already happy with downloading apps, and thanks to Ola and Swiggy and everybody else had done the hard work of educating customers to go online and download an app. So a lot of that happens digitally. We have partnerships as well. We tie up with some merchants now. So now we've expanded. We work with educational institutions. So we work with a number of players now. But originally, it was
01:21:55
Speaker
Basically, you know, people hearing about us through press, people hearing about us through, you know, digital advertising and so on and so forth, Google. Okay. Okay. Okay. And what is the onboarding process? Like, like how, how much time does it take to get an approved credit line and stuff like that? It's a, it's a two step process. So the first step is pretty fast. It takes a couple of minutes. Essentially we do a, we get a bunch of data and we quickly say yes or no.
01:22:25
Speaker
The second step, the customer cooperates because we need to do the KYC, right? It's all regulated. So RBI regulations change from time to time, but fundamentally there is some form of KYC that needs to be done. Right. And sometimes we have to, they want you to go in face to face and meet the customer and get a signature. Sometimes you can do it electronically. So it depends on the customer and depends on the banking institution, what they want.
01:22:54
Speaker
VL, for example, we'll do a biometric KYC. They'll come to house with a tablet and get everything up there. Sometimes we can do OKYC on a thing. So this changes all the time. This KYC is like a, you know, it used to be EKYC and then they stopped. This changes all the time, but whatever the regulation is, we comply with it, obviously. But once you get a credit line after the KYC, so you get pre-approved using your credit.
01:23:22
Speaker
So we evaluate it for credit, then there is compliance. But once that is done, then you get a limit. Then we pretty much never see you again. So it's all electronic. And whenever you want the money, you press a button, money comes to you. End of the month, you get a bill. You pay the bill.
01:23:40
Speaker
like auto debit or whatever, you know, ACF, mandate and other number of ways to be paid. And like, what about customers about whom you may not have data? Like what happens there? Like if a person has never taken credit before, then maybe the credit bureau won't have like a score for that person. Yeah. So our customer segment,
01:24:07
Speaker
is typically between 25 and 40, our customer segment. So for example, we don't lend to students.
01:24:17
Speaker
And typically today we don't lend to like sort of complete blue collar, right? Because there's no data about them. Where there's no data. We do a small piece to them just as an experimental, we are constantly trying stuff. But typically you need some data, even if it's not getting the bureau data, we can get bank statements, for example.
MoneyTap's Success and Operations
01:24:39
Speaker
You need some digital footprint. Anything digital, we'll take it. If you're completely off the grid, then we'll probably reject you. Okay. So bank statement would then be like a manual upload process. Usually electronics, so you can either give a net banking or you can do a PDF upload or whatever. Okay. And how has the growth been? Like from 2015, like how many users signed up for it and like, you know,
01:25:06
Speaker
How did that curve grow? Yeah, it's been pretty pretty phenomenal. For the written articles, I just forward you with a bunch of stats there. But
01:25:24
Speaker
We've had basically a phenomenal growth. They're probably the number one in the country right now in terms of FinTech in this category. And so the growth has been, we've been lucky, of course, but, you know, we're probably, you know, we've disbursed about probably five, $600 million, as I said, there were 5 million applicants
01:25:51
Speaker
We've done about 150,000 credit cards. We've probably diverged probably close to 10 lakh loans. You have a credit card also now? Also. Okay. So the business is, we are neutral whether you use a card or a
01:26:10
Speaker
how you take the money out. We just use the flexibility. And what is typically the interest rate that the users pay? It varies usually by the lender. It varies from 13% to 30%.
Future Prospects and Conclusion
01:26:24
Speaker
But much cheaper than a traditional credit card.
01:26:28
Speaker
A credit card is 42%. What next for you? Are you looking at this for the next decade or so? Or do you think you will take on more of an advisory role and go back to being a VC? What's in your mind? Good question. MoneyTap is sort of the end point at this point.
01:26:56
Speaker
I am on the boards of some companies, some of my investing companies and so on and so forth. But MoneyTap is another end as well. So if you are as inspired by the MoneyTap story as we are, then download the MoneyTap app or just head to moneytap.com and maybe even apply for a loan while you're there.
01:27:30
Speaker
If you like the Founder Thesis Podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit thebotium.in that is T-H-E-P-O-D-I-U-N dot I-N for a complete list of all our shows.