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The Fearless Explorer | Bijai Jayarajan @ Houm
114 Plays4 years ago
“I was never governed by fear” - Bijai Jayarajan
From being a young small town boy in South India to building a Multi Million Dollar company, Bijai Jayarajan is truly a fearless entrepreneur. Bijai founded Loyalty Rewardz in 2008. In his 10 year stint he raised venture capital investment to the tune of USD 26 Million & in 2017 Loyalty Rewardz was acquired for a whopping USD 100 Million!
By the time Bijai exited the company Loyalty Rewardz was managing loyalty programs for 73% of all debit cards issued in India & was processing over 200 Million transactions a month.
On a new adventure with Houm, an innovative digital product that will empower internet users to create a digital safe space - A digital home on the internet that will in a true sense ensure the privacy of our data, Bijai is once again on another fearless mission.
On this episode of Founder Thesis, catch us in a candid conversation with Bijai to know more about his inspiring journey of entrepreneurial adventures. Our biggest takeaway from our chat with Bijai was that we must chase our passions fearlessly.
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Transcript
Introduction to the Podcast
00:00:02
Speaker
H.T. Smartcast. You are listening to an H.T. Smartcast original.
00:00:26
Speaker
Hi, I'm Akshay. Hi, this is Aurob and you are listening to the Founder Thesis Podcast. We meet some of the most celebrated sort of founders in the country. And we want to learn how to build a unicorn.
From Cash to Digital: The Loyalty Rewards Journey
00:00:43
Speaker
Do you remember a time when shopping meant carrying a lot of cash in your pocket? Loyalty rewards has been instrumental in helping shift consumers' attitudes and replace cash with cash, and thereby paving the way for many of today's vintage unicorns.
00:01:00
Speaker
And Vijay Jayarajan, who founded Loyalty Rewards, is one of the few founders we have interviewed who have generated actual profitable exits for his investors when Loyalty Rewards was acquired by Biltesk for $100 million. Here's a peek into his fascinating mind and his attempt to fundamentally disrupt how we use the internet with his second startup.
Vijay's Background and Education Journey
00:01:41
Speaker
My name is Vijay Jayarajan. I'm a technology entrepreneur based out of Singapore, originally from India. My first venture was based out of India and I ran that company for 10 years, post which it got acquired and now working on my second venture, equally excited to be doing the second venture as much as I was excited to do the first venture. So these are early days and putting the head down and working right now. So Vijay, where are you based? I mean, where are you from originally?
00:02:11
Speaker
Where are your roots? I'm from Kerala and more often than not, the way I say it is I'm an original Malu and I say that that way because I pretty much am born and brought up in Kerala, died in the old Malu up till my 18 years. So first 18 years I spent there. So first time when I went out of Kerala, I had a hard time because I only spoke Malayalam and the college, you know, whether English or some bit of Hindi. Where did you go for your graduation?
00:02:38
Speaker
I went to a college called Loyola in Chennai, a great college, very transformational three years, but yeah. Why did you choose to go out and specifically that course, that college? I think the only reason is that I think all of us in the family, including myself, we knew that
00:02:57
Speaker
remaining in torture is really not an option. It didn't open up a lot of opportunities. So the idea was to just get the kid out and give him an exposure and see where it goes. And we knew someone in Loyola, some of the relatives had gone and studied there. So that's the only thing which we knew. So they said, OK, let's send them there. Parents said, go study there. There was no particular reason. In fact, I did my bachelor's in arts and humanities.
00:03:28
Speaker
So the idea was, you know, the only thing that people knew in treacherous, you know, history and then UPSC, maybe, you know, some could become an IAS officer, very limited visibility to multiple opportunities or options.
00:03:45
Speaker
So I picked up and left and went and joined Loyola and like you said, like the interesting point that you brought up. I went there and I saw this whole lot of really smart guys and I was this guy who couldn't say excuse me when I sneezed and it was a hard time coping up.
00:04:01
Speaker
you know learning to talk, learning to talk in English, learning to make yourself presentable, making yourself articulate. It was a challenging yet transformational window. Those three years where I always look at those three years is a very pivotal three years of my life. So by 1995 when you were
00:04:19
Speaker
passing out. So what were you like at that stage? What did you want to do next? Did you have more clarity? Little more clarity than when I originally started off, but not diversified. I went to Loyola and joined in the history department as a student. And typically, you know, one would do that if you either want to be a professor or academics, and that's clearly not my cup of tea. The idea was to do UPSC and become a civil servant and
00:04:46
Speaker
When you are in Loyola, the whole idea is go to Delhi, write your civil services examination and one of the most popular routes were going to JNU. So it is my two years in JNU when I was doing Masters is when I actually decided
00:05:02
Speaker
that UPSC is not what I want to do. I don't want to become an IIS officer. That's not the line of work that I want to live my life with. And then got attracted to corporate world and then pursued it from there. I think there was very clear visibility on what I wanted to do after that. And I've just always been focused on building life around the corporate world.
00:05:24
Speaker
Well, how did that happen? I mean, JNU is a pretty insular institute and you know, most kids there are not so corporate oriented as say, if you were in a B school. So how did you get attracted to the corporate world?
00:05:37
Speaker
I think two reasons. One is when you are in JNU, it's also a place from where a lot of students qualify and go on to become civil servants. And you have a lot of friends. And you started to see people who already cleared UPSC, some of them IPS or IRS, IAS, IFS. And then you get a glimpse into their lifestyle working, whether it is in Delhi or in one of the rural area.
00:06:05
Speaker
But the closer and closer I got and better visibility I got into what is life as a civil servant, while I admire their dedication and commitment to building this nation, I started to realize that that's not my cup of tea. That's not how I wanted to do things. So honestly, it was a puzzling period because I finished my master's and wasn't really qualified to go and do anything big in the corporate world, but that's really what I wanted to do.
Career Adventures: From Advertising to ISB
00:06:31
Speaker
But I took a year off actually, I took a year off after my master's, as they, it wasn't that popular then, but as they call it the gap year, right? I did a fair bit of interesting things. I stayed back in Delhi, I finished my master's and didn't go back to Kerala. I stayed back in Delhi, parents were supportive.
00:06:48
Speaker
to send me pocket money every month to make the ends meet. I did a fair bit of travel during that window, backpacking across different parts of the country, backpacking to Bihar, backpack to Rajasthan, backpack to Kashmir, and also sometimes traveling alone, sometimes just with another person. It wasn't never with a large group and it wasn't so much of a
00:07:10
Speaker
fun trip as much as it was discovering myself so go to ISBT and catch a bus and go to wherever it takes you so if you are in for example Jaipur and if you want to go to Udaipur you will sort of figure out what is the bus ticket fare from Udaipur back to Delhi keep that money aside so that I know I can get back to Delhi
00:07:28
Speaker
and if there is money left then go to the airport really backpacking included you know hitchhiking or you know getting in a bus getting in a train whatever which gets me into the next city spend a bunch of you know days there i've traveled across Rajasthan without ever checking into a hotel for many days so it could be brushing your teeth in the in the in the bus stations when you get off in the morning
00:07:54
Speaker
taking a shower when you when you are in Chittorgarh fort and you see a waterfall so you know jump in the waterfall and take a shower so pretty much using public facilities and traveling across I went all the way up to Mount Abu on that trip actually so I did a bunch of travel during that window so one year you spend traveling then
00:08:19
Speaker
Towards the end of the year, where were you at? Towards the end of the year, I decided to start working. And Delhi, at that point of time, if I had to start working, I would have, again, become a copywriter and an advertising agency. That would make not enough money to fill gas in the bike.
00:08:35
Speaker
So, actually went, got a visit visa, literally a visit visa and went to this place called Muscat in Sultanate of Oman and went there and sent out resumes to a whole bunch of companies, faxed resumes. Actually, these are the days of faxing and got a few interview calls.
00:08:54
Speaker
I went to one of them and I got a job. I actually started to work in an advertising agency. I didn't know enough to know that advertising agency has something called client servicing or something called creative or something called media planning. So I went there and, you know, give me some job and what can you do? I can talk. That's what I can do. So I was a junior account executive. That's the first job in Muscat. I think by then I was probably 23, 24.
00:09:22
Speaker
But that was a pretty bold bet to buy a ticket to a country you must have cost quite a bit and with no clear sight of how it will pay back. I think actually there was never fear. I was never ever governed by fear. I always felt that if there's something which you want to do and you go for it with all your heart, you can do it.
00:09:45
Speaker
I mean, you know, when you're going to a big country and if you can't get a job, what good are you? So I never felt that if I go there on a visa, I wouldn't get a job. That sounds ridiculous for anyone. So I just went there. And like I said, you know, I could talk by the time, you know, you're talking about masters in another year, the handicap of not being articulate, et cetera, had gone away. And I could talk and yeah.
00:10:09
Speaker
I got a job. I don't consider that as a bold step because I wasn't going there saying that I need to get a top job. I need to get a job equivalent to one of the premier MBAs. I was still grounded enough saying that all I've got is a master's in history. So get a job and start somewhere. We'll figure out. So the idea at that time was go work in the Middle East for a few years and then go to the US and go to MBA from Harvard or wherever you can.
00:10:36
Speaker
You know, I must say, while on one hand I wrote GMAT and wanted to go to the US and do an MBA, etc. But I've also always been an end of file, always personally been an end of file, want to be in India, want to live here. I wasn't one of those guys who felt that going to US and getting a job there was the end of the life.
00:10:56
Speaker
This is what a whole generation of youngsters grew up with that feeling, right? I was in one of them. So while in Dubai, this whole new concept came along called the Indian School of Business. And then I heard people like Rajat Gupta and Sumitra Ghoshal and Deepak Jain and Pramath Sinha.
00:11:15
Speaker
All of these names were drumming up the spirits. The idea of being a part of a business school, which is being created from ground up to create a business school of global standards in this part of the world, that was very appealing. So I applied straight away to ISB and didn't apply to any of the business schools in the US. ISB in fact didn't have any roots or backgrounds or nothing. So when I first applied to ISB, our application package was exactly the same that was being
00:11:45
Speaker
used in Kellogg that year. We had a partnership with Kellogg while it was starting out and our applications were also evaluated in Kellogg that year which in other words saying that if I had applied to Kellogg I probably would have gotten in there as well. The credit was pretty same and I had a decent GMAP score particularly for a humanities background student
00:12:05
Speaker
And I had international work experience. So it wouldn't have been very difficult to go to a good business school in the US. But I went to ISB because I was really excited about the idea of being a part of a group that's creating a business school. You were in the first class. It's extremely sticky point. It's called the founding class. That's what we're called.
00:12:25
Speaker
Even the ISB as the school now refers to class of 2005 or class of 2003, but we had never called class of 2002, we called it the founding class. So you were in the founding class of ISB, so what was that experience like? Was it another transformational experience like Loyola was?
00:12:45
Speaker
Yes and no. Yes and no. But I think I had more fun in Loyola. Transformational yes because ISB was good learning. ISB had the best of professors that you could ask for. Really because ISB basically didn't have any professors on board because this is just the beginning. I mean there are one or two professors joined the school but otherwise
00:13:05
Speaker
it didn't have a spectrum of all subjects all purposes. So what ISB did is it went and picked and you know chosen the best professors for each stream from different parts of the world. So that one year I was taught by professors from Stanford, Wharton, Kellogg
00:13:21
Speaker
LPS, INSEAD, you name it. So, the best professors from the world in their respective subject. If I had to be taught marketing, either Deepak Jain or Srinivasan, these are the best names in the marketing academic world at that time. If we were to be taught negotiations, for example, then Madan Pillautla from
00:13:44
Speaker
London School of Business will come and teach you. So it is an interesting model where we had really the best of professors coming in from different parts of the world and teaching. So from a curriculum and from an academic perspective, I believe that that one year perhaps is probably the best in the world anywhere, including Howard's and Wharton's because they didn't have the option to pick and choose the best from different places. Right. So from a pure academic curriculum perspective, that one year perhaps was the best one year of management education in the world.
00:14:12
Speaker
So that is good. What wasn't so good is I really struggled. ISB had an amazingly outstanding class as founding class.
00:14:22
Speaker
I had you know tons of IIT engineers floating around on campus and I couldn't really compete. Academically I couldn't compete because they were just really very very strong and yeah I struggled through that window. By then I had also become sort of you know unlike the school days which I talked about when I was dominant and not a studious kid but through the Loyola years and Janu years and
00:14:45
Speaker
and then working in Muscat, working in Dubai. One sort of developed an attitude about yourself and you've got a winning smell to yourself and then suddenly you go to this business school where there are so many guys with that winning smell that you know this is typically what I've heard is this is typically what happens in IITMs when you know kids from different parts of the world who are really the best of their lot in their area and they go to IIT
00:15:11
Speaker
And this year, a whole lot of other guys were equally better or much, much better. And that's a very revealing year for IIT engineers in the first year of their campus. And for me, it was a little like I just suddenly got thrown into the middle of a whole lot of really smart guys. But that one year was pretty intense, pretty intense one.
JET Airways Experience and Loyalty Rewards Foundation
00:15:29
Speaker
And from campus, where did you get
00:15:31
Speaker
Ah, that is an entirely challenging window. So I passed out in 2002. So you can imagine how the corporate world was in 2002, right? Once Rajat Gupta came to campus and he's the founder of ISB, right? And he was at that time the pinnacle of his glory, right? He was the MD of McKinsey and stuff. And he comes and stands in front of us and tells us that in my 30 years of corporate life, I've never seen a year of this stuff for recruitment.
00:15:56
Speaker
It was a struggle, it was really a struggle for the school also because see the school this is the first class, this is the founding class and getting this bunch of guys placed is extremely important for the school from a reputation perspective and it was also very expensive school and it had a lot of you know press visibility, media visibility so for ISB the class getting placed is very important even from a longevity perspective or even viability perspective will this model work
00:16:24
Speaker
And at the same time, it was a terrible, terrible year from a corporate recruitment perspective, B-school recruitment perspective. And I think all of these guys, you know, all the, all the folks who were associated with ISB did put in all the efforts that they could to make sure that, you know, calling companies and say, there's a whole bunch of good guys go to ISB recruit. So that happened.
00:16:44
Speaker
And eventually I got recruited into jet airways. So my campus placement was into jet airways as a management training. I didn't, of course, remotely think when I was going to business school that I'll go work for an airline. The only airline experience that I've had before ASB was, you know, two or three flights that I've taken before that. You wanted to join like a marketing agent.
00:17:05
Speaker
I was very clear that I wanted to go into marketing and maybe then general management, but clearly and joined JET. JET came to campus, had five rounds of interviews and they had a whole kind of psychology tests and group discussions and all of that. Eventually, there were five of us who were recruited into JET IWACE that year. And yeah, that's how I came to Mumbai. So four years at JET, what were you doing in those four years? Again, I think in some way I would look at that's a sort of a
00:17:35
Speaker
Second, transformational year so to speak. In some way look at those four years is my similar to the years in Loyola because that is the first true blue corporate job. Before that in Muscat in Dubai, I was really young, juniorish, figuring out but here post a business school education, one gets some responsibilities and that's the time and you can sort of prove yourself. So I worked in jet for four years and as a matter of fact,
00:18:01
Speaker
Globally, airlines don't really recruit from business schools. So, if you go to, you know, Harvard or Wharton or Stanford or anywhere, you hear that, you know, the VCs or the consulting companies or the iBanking companies, they're the top recruit or tech these days, but you never hear that, you know, an American airline or Delta is the top recruiter, day zero recruit. It's never the case.
00:18:22
Speaker
So airlines typically don't recruit business school, premier business school graduates. What happened is that year while we were in Hyderabad, Mr. Naresh Goel came by. He was invited to one of the marketing functions and he came to campus and perhaps he liked what he saw. He went back to the airline and told the HR department go and recognize me. So they didn't know what hit them.
00:18:46
Speaker
There wasn't a management program established in Jet Airways. It is the usual recruitment. People grow up the radar and it was a struggle both for the airline and both for the recruited graduates as well because when we went into Jet, Jet didn't have an established process to manage this thing, right? If you're in HLL, you know that you will go in as a management trainee, then you will go in as a sales manager or whatever. There's a process and it's been done for many years and
00:19:12
Speaker
that organization knows how to manage that and just sort of struggled with it. So, we were first put into different kind of trainings. So, I tell you, it was one of the most fabulous things that could have happened to anyone by virtue of, you know, by default, not by design.
00:19:28
Speaker
So, Jet didn't know what to do with these guys. So, Jet said, I literally went through and worked in 30 departments in that airline. Many people who have been in the airline for 10 years probably didn't even know that there are 30 departments in the airline.
00:19:45
Speaker
So that was an amazing experience and post the training I ended up joining marketing team and was straight away thrown into Jack privilege go take over. There was this department already existing and the person who managed the department was moving on to manage another department and there was a vacancy and I was said go take over. So went and started managing that team and I think wonderful time
00:20:14
Speaker
coincidentally also very opportunistic time because during that window that I was managing jet privilege, jet went through an IPO, which means you need to dive deeper and deeper into the numbers, understand the financials of the frequent flyer program, you know, and liability and deferred liability and revenue booking and all of that from a financial perspective because IPO is a pretty important thing for any organization.
00:20:38
Speaker
Then Jett went to an acquisition, acquired Sahara, so I had the responsibility of merging their frequent flyer program with our frequent flyer program. Then I also had the responsibility of, while Jett went from being a domestic airline to an international airline, as, you know, again, time when I was heading the program, so again, my job with my team,
00:21:00
Speaker
recalibrate the program to make it an international program. How will the international accrual work vis-a-vis how it worked when it was a domestic program tears and platinum how many if platinum was only 60 flights maybe international maybe that's 20 flight for example that kind of number. So I think that led to my
00:21:20
Speaker
by necessity, going deeper and deeper into the science of loyalty management as a business. So I actually resigned from Jet, wanted to start up. Loyalty rewards was incorporated during my notice period in Jet Airways. And I had a bunch of job offers when I left Jet Privilege. I didn't take any one of them because I wanted to start up, right? And I sat at home. I sat at home and tinkering with business ideas. I went and met organizations
00:21:49
Speaker
and telling them retails and banks and telling them, hey, we could do this and we could do this to your consumer loyalty science. And they were already kicked about it. This is a very nice idea. Let's do this, Bajak. And I realized, you know, how will I do it? I was just one guy. I didn't even have a website, live alone technology or team or financials. So I realized that company, I say, no, Bhanta. Companies don't get created like that. You need more than just the business understanding.
00:22:15
Speaker
And of course, two months salary didn't come in and that wasn't easy. So I panicked saying, hey, I don't know how to start a company, and I'm not getting paid. So one of the job offers which I had when I left Jatavas was MasterCard. So I actually called them back after two months and said, hey, can I still come and work for you? And yes, you can come. So that's how I ended up working for MasterCard. So I was the head of MasterCard's relationship with State Bank of India. So true blue, account management job.
Building and Expanding Loyalty Rewards
00:22:44
Speaker
Statebank is a difficult client in the B2B world. Typically, if you can manage Statebank, you can manage anyone. It's a very demanding client, but interesting to work with. Very big opportunities to win together. So I had a great time working with MasterCard and Statebank, but also I had enough time to write a business plan. And yeah, like I said, towards the end of my MasterCard window, MasterCard was the day job and weekend job was fundraising. So I would practically go and meet every VC who can
00:23:13
Speaker
who is willing to give me half an hour and would pitch to them saying that hey this is my business plan, this is what I want to do in the loyalty space, can you fund me? What was your pitch? It was really a paper plan and it doesn't get done, it doesn't happen very often in India but I actually got funded. One of those funds actually wrote me a term sheet and I was surprised, I said oh nice.
00:23:39
Speaker
And then I was like, after I got the term sheet, I resigned. And this was like just you alone. I mean, you did not have a co-founder. There was no team to talk about. It was just an idea and a business plan and a PPT. It's not even me alone, right? It's not even me full. Forget about co-founder.
00:24:00
Speaker
It's not even meaningful because I'm still working with Mastercard. I hadn't even started, I hadn't even left to start up. So it was not even meaningful. It was really basically a paper plan more than anything else. And I think what really worked is perhaps, you know, I had worked in the loyalty space for four years and that experience was useful. So probably what I wanted to do was interesting and
00:24:24
Speaker
These are also very early days for the venture capital industry itself. Unlike India where funding happens in a little more often and a little easier than those days when it was very early days. But like I said strangely enough someone wrote me a term sheet. And what was the business plan you had like how did you see it? I think business plan was largely what got played out in loyalty rewards. We didn't deviate a lot. It was about managing loyalty programs for a whole bunch of organizations.
00:24:49
Speaker
and the organizations would pay you a fee. Yes, there are multiple revenue streams. Organizations will pay you a fees. We will also monetize the loyalty program per se. So, if you have a million people in a loyalty program, you are running it for a retailer. So, retailer will of course pay you for running that loyalty program, but then you will also help the retailer generate some revenue from the loyalty program, from these million people and
00:25:13
Speaker
If you have a million people and each of them have say 5000 rupees of discretionary spending capability in a month, that is 5 billion, right? 5 billion is 500 crores in a month and if you are able to channelize that discretionary spend capability into your partner organizations and if you can take, you know, if you can take a percentage of that additional revenue that you are giving to those organizations,
00:25:39
Speaker
for analyzing it, then you could make money. Strangely, in 2008, what happened again, it was one of the lowest corporate periods that precisely when I started out.
00:25:52
Speaker
I quit MasterCard, started loyalty rewards operations, technically incorporated in June of 2006 when I left JET, but started operations as my being the first employee of the organization and worked there for 10 years, managed loyalty program for 10 years across India. That's pretty much what happened after that. What was exactly the tech product or the platform that you built?
00:26:18
Speaker
It's more from a loyalty program management. So you have say 1000 consumers, you have their profile and you have accrual, you have redemption, you have communication opportunities to them, you have customer service, you have points accounting. So the holistic loyalty program management platform. I had used one like that when I was in JET, right? I ran the loyalty program using one of the loyalty platforms.
00:26:44
Speaker
In fact, that was another interesting experience in Jet. When I started to work with Jet Privilege, they had a different technology platform. During my time there, we changed the technology platform. We licensed a platform called Chris from Emirates Airlines incident. Emirates Airlines is tech division called Mercator and they had a loyalty program engine, loyalty program management engine, which we licensed. So went through that implementation process, getting a new platform in place, etc. There was again, good learning.
00:27:14
Speaker
So all of that did help. So one of the first things that we did in loyalty rewards is to build our own technology platform. It took a bit. But we said that rather than going and using some other existing loyalty engine, we want to have our own loyalty. And so we took a few months to build that engine. And let's say I started in April, May, office was in place. By the time we got to December, we were probably 10, 12 people, out of which maybe six or seven were
00:27:43
Speaker
technology and three were non-technology. How would a person use the loyalty program? Like they would get a card which they would swipe or they would show the card number and the retailers would capture that and that boss would talk to your system and tell you that. We didn't want to occupy a card slot in the consumer's wallet and we didn't want the consumer to pull out a card and do some incremental efforts for him to get those points. We wanted to make it seamless. That's on one hand
00:28:12
Speaker
On the other hand, luckily, our clients were all banks. So in India, interestingly, most of the banks that we started to work for didn't have loyalty. And basic proposition from the bank to their consumers was that, hey, use your debit card to pay directly at a shop rather than going to an ATM, withdrawing money and then going to a shop.
00:28:35
Speaker
spending, right? So you have a debit card in your pocket, don't think that it is an ATM card. And consumers didn't know that at that point of time, 99% of the debit cards issued by these banks were being used as ATM cards. So consumers would go to an ATM, withdraw cash, and then go spend that cash. For a bank, it's a double whammy because every time consumers withdraw money from an ATM, it's a transaction, right? It costs bank money. And on the other hand, if they could get the consumers to spend
00:29:04
Speaker
directly at a merchant outlet as an issuing bank the bank would make some money bank would get what they call interchange so it was you know it was classic 101 where you knock off cost on one side when you don't have an ATM transaction and convert that into debit card transactions on the other side you generate revenue so it was a profitable model for the banks and we were telling the bank that listen launch a loyalty program to incentivize this behavior banks found sense in it
00:29:32
Speaker
And so we were essentially saying just use your ATM card and go and spend. Whenever you spend directly using the ATM card, we will give you some points. We, in the sense, the bank would give those points. So when did you acquire the first few banks? Strange and again a lucky break for us. Our first client was also the largest client anybody could aspire to get. So our first client was State Bank of India.
00:29:58
Speaker
Wow and this was one of the mastercard relationships? Partially yes but not so much. The reason why I say partially yes is because at least I knew who is who in state bank but answer is no because knowing who's who didn't help us get the deal so I did go and tell say state bank hey why don't you run a loyalty program and convert all of these debit card transactions into this ATM transactions into debit card transactions
00:30:25
Speaker
and state banks and sounds good can tell us a little more about it. So we said worked with their team and give them the full you know spiel about how this is a profitable model and what are the details of running this model and in the end of all of the state banks said this is all good but who will run this I said we can run it for you but they said no we can't we can't just give it to you we are a public sector bank and so we need to do an RFP and I felt you know quite let down because I
00:30:50
Speaker
I had worked with the bank for a few months to generate interest and make them understand the benefit of having this and all of that but you know public sector bankers you know it is what it is so they had to do an RFP they did an RFP you know 10-15 companies came in pitched for it and there were different rounds of you know 10
00:31:06
Speaker
companies became 15 companies then seven companies then five companies then last three companies and eventually we won that and that RFP was you know so hard for us to win it was it was online you know reverse auction forward auction all of that state bank did we had to bid we had to bid and go to the lowest charge to win that we were L1 and then we won it and yeah then honestly Akshay there was no looking back after that
00:31:30
Speaker
from State Bank, then Punjab National Bank, then Central Bank of India, then Bank of India, then Union Bank, then Corporation Bank, then Karur Vasya Bank, then Federal Bank. In how much time? Are you talking like within a year you acquired all these banks? No, I think that's... What was the trajectory? That's another interesting thing which we did. When we won State Bank, of course, there was a big win and our investors were very happy.
00:31:59
Speaker
that you know gave this bloke some money but it seems to be like they got a good client so shall we go and get a whole bunch of new clients then and we said no so internally as a team by then in loyalty rewards we said you know we've beaten off something very large let's chew this well let's not go after the rest of the markets very well because we need to prove it to ourselves as well as to the bank that we can run this well because that is the first client we had one or two small you know
00:32:25
Speaker
retail clients by then but they were not really anything substantial. State bank was the first real large client and so we put our head down and didn't do anything else for 12 months. I think that was one of the smartest things that we did when I look back. We literally put our heads down, got our technology in place, got the processes in place, got the people in place.
00:32:47
Speaker
and started to run that bank's program really, really well. And by the end of 12 months, the number of debit card transactions that the bank had really took off. So we had this interesting graph, which said pre-loyalty program, 24 months, and post-loyalty program launch, 12 months. And you can see a decisive departure where the line goes up once the program is launched. So we only needed that graph to take shape
00:33:15
Speaker
and get our processes and technology in place. So after 12 months, then we went to town to meet other banks, we just had to press into this saying, hey, you know, this is what loyalty program does to you. And when this happens to you, this is the math. You know, you save so much money from ATM transactions, you make so much revenue from post transactions. So this is the math. And I think we signed up 10 banks in the next 12 months. That was pretty rapid.
00:33:41
Speaker
And you would also take care of marketing the program to the bank. We used to call it end to end loyalty program management. So starting from managing crediting points to consumers account to facilitating redemption of those points to carrying out
00:33:58
Speaker
you know, millions and then hundreds and hundreds of millions of marketing emails and, you know, SMS campaigns to building the website for the loyalty program, managing that online consumers could come and log in and redeem and view their points, all of that to managing the customer service center where a consumer could call and say, hey, you know, I have these many points. What can I do with it? All of that. So so it is fairly end to end where
00:34:27
Speaker
the bank got their loyalty program managed 100%. Our pitch was itself end-to-end loyalty program management, their websites, their mobile apps, and by then my technology team was like I said 6-7 people, then it became 25 people.
00:34:44
Speaker
then tech team was 50 people. By the time I actually exited the company, my tech team was maybe 120 people, 120 people technology team. When I was exiting again, loyalty rewards ran loyalty program for 73% of all debit cards issued in India. That's a humongous market share, right? That's a country as large as India. And to give you numbers, that is also adding up to a billion consumer profiles.
00:35:08
Speaker
So, at some point of time in our technology systems, we had profiles of consumers across different programs that we run, not deducing cumulatively a billion consumer profiles for which we ran loyalty programs. In fact, in the quarter that I exited, that is end of 17, December 17, the cumulative value of loyalty points in the market exceeded 1000 crores. So, the program had got scaled reasonably well.
00:35:34
Speaker
We were, you know, points accrual. We were crediting, I think, over 5 billion points a month and 200 million transactions every month. Those numbers were, you know, billion consumed profiles, 73% market share. So by then it had got played out well, stabilized, you know, organization had matured. There were processes and HR department and employee handbook and leave policies and all of that.
00:36:03
Speaker
It became a reasonably stable organization.
Exit Strategy and New Ventures
00:36:06
Speaker
So why did you decide to exit? Multiple reasons. One is the smaller reasons first and most important reason last. One is I had an investor right from the beginning, like days ago. So I looked at my investors more as partners rather than actually venture capital investors. I felt that we pretty much built this together. It's never that I started a company and the investor came in later. This is my company. I felt that this is our company.
00:36:30
Speaker
and Kenan and Venture East and great board meetings, great investor relations. Like every other founder-investor relationship we've had our highs and lows, we've had our fights. But I think more or less, overall, I really liked my investors. And I think they played an important role in helping me mature as an entrepreneur. And in 2015, investors exited. So the CDC was more of a strategic investment where a strategic invested into the company and acquired Series A and B investors.
00:37:00
Speaker
This is a company called India Ideas. They acquired my series A and B and they also invested a substantial amount into the company's primary investment as part of the CDC fundraise. So one is after my investors exited, I sort of felt a little lonely because I had really gone close. I think we had professional relationship grown over a period of time into personal relationships. Love, hate as it will be always, but it was a good relationship and you know,
00:37:30
Speaker
It was, I felt a little lonely. They were almost like co-founders. They were, you know, not, I can't say that about series B, but I can say that, you know, venture is definitely was there from day zero. But more than co-founders, we had very healthy relationship. And I'm also one of those founders who engage with the investors a lot. It was not like take the money and data, bye-bye. I actually worked with them closely. I kept them informed about what's going on, took advice very, very seriously whenever I felt confused.
00:37:57
Speaker
didn't feel you know uncomfortable picking up the phone and calling them and saying hey what do you think about it I can't I can't figure out what's your advice and I think they felt good about that as well and so the relationship was very healthy and when they suddenly left from the board there was no more that kind of board meetings and you know we were drinking after the board meetings and we were not celebrating as much as we used to
00:38:21
Speaker
I felt a little lonely. That's point one. Point two, by then company had also got stabilized. We had our systems and processes in place. And I think some of the things that we did were very, very useful for me. You know, we had we had we had quarterly appraisals. It started off as handled appraisals. And then at some point of time, we broke that into four quarters.
00:38:42
Speaker
and we also made appraisals a very quantitative process. So every person in the organization irrespective of whether it's a tech role or operations role or sales role or relationship role the requirement what was the expected result from that employee was broken down into numbers. If it's a relationship we would say you would need to meet your client x number of times in a month and if you have met x number of times you will get score x otherwise y. So we're very very quantitative
00:39:08
Speaker
so that when you sit down for your appraisal, it was five minutes, it's over. Because that person will come for three months, I had to do 27 visits, I've done 32, I got 110%. And if it's 120%, you get X%, if it's 100%, you get Y, if it's 80%, if it's 60%, these grades were formed. So much so that, you know, everybody had absolutely good degree of understanding what need to be done. And the task of setting this target for the year has to be done once in a year, in either February or March.
00:39:38
Speaker
and Aprilio kicked that off and everybody just goes by. Like that, many other processes were very, very process-driven as an organization and very quantitative as an organization and very people-independent to a very large extent. And as a result, towards the last few years, last couple of years, I started to find myself more free than not. I needed only three or four hours
00:40:03
Speaker
in a day to run that organization and till grow at 80 or 90% year on year. It was cruising reasonably well and then my investors had exited and you know I've always been a workaholic and the kind of guy who goes to office at 8.30 in the morning every day
00:40:21
Speaker
and there till 10 o'clock, 11 o'clock every day. And I started to find myself reaching office at 10.30 and 11. And I started to see myself leaving at 5.36. And things were great. Things were growing well. So I had this, you know, large-ish office in a reasonably decent sized team.
00:40:38
Speaker
I could sit in one corner as the founder, CEO, a lot of respect and young employees who come and join, they want to talk to the CEO once in a month when there is a coffee with CEO session. So it was a lot of glory and all of that, but I wasn't, you know, I wasn't burning.
00:40:55
Speaker
Yeah, probably that's not what I like. I'm probably a builder than somebody who wants to sit back and soak it in. And around the spirit, a new idea got into the head. I cooked it in my head for maybe, you know, close to a year. And then I felt that this is something which I believe in passionately. And it's also very difficult. So it will be challenging. So I went and spoke to
00:41:19
Speaker
the people who had acquired my CDC and be investors saying, Hey, listen, this is going great. And you guys are great. But you know, you don't need me. It's only three hours and I'm not fully busy. So why don't you just buy me out as well and I will exit. They were great guys, actually, you know, they were really great guys. How much sake did you have at that time? They had significant majority. Let me put it like that.
00:41:45
Speaker
But I was still the promoter and MD and CEO. I had series A, series B, and as part of series C, they had also put in 120 crores primary capital into the company. So they had substantial equity, but I was still the founder. And it was important for me to have them buy me out and then my exit, because that's the wealth that you've created over a period of 10 years.
00:42:11
Speaker
As part of their investing into the company, there was of course various put options and call options and exit timelines and all of that. I think none of us really looked at any of those agreements when I spoke to those guys. Like I said, they were great guys. They first said, hey, this is going so well and we wanted to run this for a long time.
00:42:31
Speaker
I said, yeah, you know, nobody starts to leave, but I'm getting passionate about something else. And I'm not busy running this, you know, three, four years, three, four hours a day is all it takes. And then we spoke a few more times. And then over a period of a few months, you know, I came back and thought about it. Do I really want to exit? You know, can I be living without loyalty rewards, which has been something which I created, I founded and ran it to this level? Do I want to leave this company? Am I really passionate enough to do the other thing?
00:43:00
Speaker
They were very graceful. I think neither them nor I ever looked at any one of those agreements. Neither did we have too much of haggle around valuation or etc. You know, we sat in a room and talked about it and we agreed on a number and they just got me out.
00:43:15
Speaker
And I exited. It was a fairly pleasant and peaceful way of exiting an organization. Like I said, we never went back and looked at what was written in the agreement, neither from their side nor from my side. And they were making concessions for me to exit. I must acknowledge that. And I was not being a sticky guy in the process in which I exited or the valuation that I was asking for. So
00:43:36
Speaker
It takes two to tango and it is all good exited in the end of end of December 2017. So I started in eight and ran it till 17. It's actually three months short of nine years. So I generally say it's 10 years window and yeah, first of January 2018 started the new venture pretty much all over again.
00:43:56
Speaker
Again, you woke up one day and you had no office to go to. It's pretty much like that. It's actually pretty much like that. Besides the fact that this time I was a little more matured, I had 10 years behind me. I knew a thing or two about how to start a company. It was not a green horn. So it was not the same experience. But in some way, it is overall a different experience.
The Future of Personal Digital Spaces
00:44:19
Speaker
Also, this is a global setup. So tell me about the idea which took a year to mature in your mind.
00:44:25
Speaker
It's an innovative concept, Akshay. It's something which not intuitively think of, but the deeper that you think, ideally, you should get scared about it. The way the digital world is currently, right? All of us are extremely connected to the digital world. We use all kinds of digital products and
00:44:47
Speaker
Overall, across this digital world, connected to everything and holding everything together is this thing that we call the internet. And the internet plays an important role in everyone's life, including this conversation. Everything is connected to the internet and we are all comfortable the way it's working out. In fact, we are more than comfortable.
00:45:10
Speaker
you know if you were driving across to meet me you'd say I'm 27 minutes away from your place you know because your Google map is on and you know precise location while you're tweeted and you send a WhatsApp to somebody you reply to an email you're totally connected and powerful but that's on one hand you know you have close to you know three to four billion people
00:45:30
Speaker
who use internet every day today. In some way when you look at it, these three or four billion people on one hand while they feel extremely powerful and connected and all of that, in reality, I started to feel that each one of us are actually extremely powerless. You know, we are actually users of the internet by virtue of having no other choice. And as a matter of fact, everything that you use on the internet
00:45:53
Speaker
are owned, managed and controlled by some other organization. In some way, let me put it another way in an interesting way is in the physical world that we all live in. You live in Delhi, you have a house there and you know, different parts of the places where people live. If you look at this physical world and if you rewind a few centuries back, there was a period called monarchy, right? When kings and emperors and rulers, kingdoms and during that window, there might have been a period when literally 10 people in the world own all land on it.
00:46:23
Speaker
If you are Chandragupta Maurya, you own your kingdom, you pretty much own your kingdom. If anybody builds a big fence around this land and declares that this land is mine, then Chandragupta Maurya's people will come and kill him. That kingdom belongs to king and the people live at the pleasure of the king and people are called subjects.
00:46:41
Speaker
But of course, people loved their king, king took care of their people, life is good. But in some way, the digital world today is evolved to a similar point where physical world was in monarchy. Literally, a few handful of companies own everything that is on the internet and there is no concept called private ownership of the internet.
00:47:02
Speaker
Just the same way it was in the monarchy in the physical world where there was no concept called private ownership. So because of the way internet is owned, basically, you know, I'll tell you a startling number that actually if you add everything that is on the internet together,
00:47:21
Speaker
Put everything together into one big bucket in terms of data, in terms of gigabytes or terabytes or petabytes or hexabytes. Quantify all the data on the internet. Would you believe it if I tell you that almost 99% of all data on the internet are controlled and owned by just two companies? Your guess is as good as mine, even Google and Facebook.
00:47:44
Speaker
Because both these companies also have gigantic wings within themselves, right? You have, you know, which is the second highest searched website in the world, besides Google? Google is where maximum search happens. Where is the second highest number of search happens? Would you know? Facebook is not aware. YouTube. Today, whatever you want to know, how to make Irish coffee, you go search on YouTube. Right.
00:48:07
Speaker
So that's also Google Gmail, you know, 2 billion people on an average, if you have 5 GB of data in your mailbox, that's 25 billion GBs of data, all accessed, controlled by one company in their servers, with consumers having fairly zero degree of control. So what will
00:48:27
Speaker
the business idea that evolved from this thought. So that's a good question. So if this is how the Internet is structured today and consumers are all, you know, sleeping in some way, this is like matrix where we are all plugged into the Internet. We are all using Internet. We are simply made to feel happy, but we are actually quite powerless. Whatever you're going to have to wake up and realize that, you know, you are absolutely powerless and Internet is owned and controlled by just few companies. So what can you do about it?
00:48:56
Speaker
With the privacy being such a big concern and with the way your digital life is currently structured where your digital information is scattered all over. So that's where we came up with this thought that the true solution to this problem as structural, fundamental, deep level solution to this problem is ownership actually. Unless consumers actually have ownership, you will never have privacy. That is the fundamental premise of our product.
00:49:25
Speaker
That is a core concept of a product. On top of that, of course, you've built additional positioning of the product in the consumer's mind and features and functionalities and services and all of that. So you are selling consumers their own space on the internet.
00:49:40
Speaker
No, I wouldn't put it that simply our product is a little more complex. Maybe eventually it might eventually have a simplistic positioning statement or line, but actually our product is a little more, you know, the concept is a little more than just that. But let me build that. So if you want to have privacy and for that if you need to really own your own place on the internet, let's come back to the physical world, right? From the time of
00:50:06
Speaker
Chandragupta Maurya monarchy period when there was no concept of private ownership to fast forward to today's world where private ownership as a concept is one of the fundamental pillars of human society. But how does private ownership get manifested mostly? Mostly it manifested in the form of a home.
00:50:25
Speaker
in this physical world, to think of it today, for example, in this physical world, the most private place that you have is your home. It need not even be an owned home. Home as a concept, rented home or owned home, doesn't matter. That's a
00:50:42
Speaker
legal position but your home is the most private place for you in this world. Home is also the place where you keep all your personal stuff that belongs to you. There is a whole bunch of things that you keep in the office. Who does that belong to? That belongs to your company. Where do you keep your personal things? That you keep it at home. That's the most private place that you have in this world. So we're saying that it is time now for all of us to actually have a digital home as well.
00:51:10
Speaker
The same way we have a physical home, it's time for us to have a digital home. That's our core concept and then it evolves from there a little bit more. But the core concept is it's time for you to have a digital home.
00:51:27
Speaker
So that was Vijay talking about his next big bet that he's hoping will transform the internet for consumers. Tell us what you think about his idea and if you would like to sign up for the product by mailing us at hello at the podium dot in.
00:51:45
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-M.IN for a complete list of all our shows. This was an HD Smartcast Original.
00:52:13
Speaker
HDSmartCast.