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The Two-in-One Startup: Why Anil Goteti Built Scapia as Card + OTA
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Ever wondered how credit card companies actually make money and why your rewards never seem to add up?
Anil Goteti, Founder of Scapia, reveals the hidden business of cards: from interchange fees and breakage profits to why banks spend ₹3,500 acquiring each customer and still wait three years to break even.
The business of cards in India is a multi-billion dollar industry built on economics most consumers never see. Anil Goteti spent eight years at Flipkart mastering consumer behavior before diving into this opaque world with Scapia, a travel-focused credit card that's raised $72 million to challenge how the card business operates.
In this masterclass conversation with host Akshay Datt, Anil deconstructs the entire value chain: how merchant discount rates get split between issuing banks, acquiring banks, and payment networks like Visa and Mastercard, why co-branded card partnerships exist, and how rewards programs are designed so 50% of points expire unused, a profit center called breakage. He exposes why traditional banks charge forex markups of 3-5% on international spending, how customer acquisition costs in the card business have ballooned to ₹3,000-3,500 per customer, and why it takes six to nine years of card usage before banks see real profit.
Anil also shares Scapia's contrarian approach: zero fees, zero forex markup, instant transaction visibility, and making reward redemption so easy it threatens the breakage model competitors rely on. Beyond card economics, this episode explores how Scapia survived when RBI banned their banking partner from issuing new cards, why the business of cards in India is still massively underpenetrated compared to Western markets, and how the convergence of fintech and travel creates dual revenue streams that make their aggressive customer economics sustainable at scale.
What You'll Learn:
👉The complete business model of credit cards: how interchange fees, MDR splits, rewards programs, and interest income create the revenue stack
👉Why banks spend ₹3,000-3,500 acquiring each card customer and still need three years to reach breakeven on that investment
👉How Scapia built a $72M card business with zero fees by monetizing through travel commerce and challenging the breakage profit model
👉The hidden economics of co-branded cards: how fintech companies and banks share risk, revenue, and customer acquisition costs
👉Why India's card business is poised for explosive growth with only 6-7 cards per 100 people versus 300+ in developed markets
👉Real-time product innovation that's reshaping the card business: instant forex conversion, transparent rewards ledgers, and seamless bill payments
#CreditCardBusiness #CreditCardEconomics #InterchangeFees #MDRExplained #CardBusinessModel #CreditCardIndustry #CobrandedCards #RewardsPrograms #BreakageProfits #ForexMarkup #CustomerAcquisitionCost #CardUnitEconomics #PaymentNetworks #IndiaFintech #CreditCardStartups #FintechBusinessModel #TravelFintech #CardIssuingBusiness #BankingPartnership #CreditCardRevenue #StartupIndia #FintechIndia #CardPayments #digitalpayments Disclaimer: The views expressed are those of the speaker, not necessarily the channel
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Transcript
Introduction to Anil Gauteti and Scapia
00:00:00
Speaker
You've had nine years of success after success at Flipkart and now your first attempt and then you're returning money. We took a very bold call to return the money, shut down the business.
00:00:12
Speaker
Somebody is going to incur a loss if you actually don't deliver the returns. rights I just wanted to do the right thing responsibly. Anil Gauteti is the founder of Scapia, which is India's first credit card for travelers.
00:00:24
Speaker
Scapia has raised $72 million till date to target India's Gen Z travelers. We are able to provide a new age experience that you know Gen Z's and millennials really love.
Challenges and Structure of Credit Cards
00:00:34
Speaker
and then What's the hard thing about selling credit cards to Indian consumers?
00:00:50
Speaker
Anil, welcome to the Founder Thesis podcast. You run a credit card company. ah Can we start with understanding what exactly is a credit card and how does it work?
00:01:03
Speaker
Yeah, ah thanks, Akshay, for having me here. Looking forward to the conversation. Yeah, sure. First, ah let's start with what a credit card is. So we are in the business of actually building co-branded credit cards with banks.
00:01:17
Speaker
Obviously, we can't on our own issue cards to customers, but we work with banks who have the license and the ability to ah issue credit cards and ah they actually work with our customers to issue cards to them.
00:01:31
Speaker
So what is a credit card? ah I haven't been asked this question for quite some time, but I think it's a good exercise for those who are probably unaware about the cards and what they do.
00:01:43
Speaker
ah Look, a credit card is a payment instrument, right? It's a payment instrument where you as a customer... ah go to a bank and then you can ask the bank for a but the payment instrument where the bank verifies who you are, your ability to pay, what you do for a living to be able to pay, and then assesses your credit history and then gives you an unsecured line. What I mean by unsecured is there's no collateral against it. You don't have to put like a home or a any other property against it as a security for the credit line that the bank gives you.
00:02:22
Speaker
And they assign a certain limit, like, you know, Akshay, we think you can ah use a limit of up to, let's say, 2 lakh rupees, right?
00:02:33
Speaker
So that 2 lakh rupees is given as a limit to you on the card, as a card, as a payment instrument. And that card then can be used across various outlets of retail or shopping or restaurants, wherever you want to go spend,
00:02:49
Speaker
where instead of paying cash or ah using your money immediately from your bank account, you can now use this payment instrument, which is the card, where you can tap on the payment devices, which is the which are called the POS machines, where the payment is then authorized and the credit card is so tapped or swiped and money is ah you know taken from the credit ah line that you have been given.
00:03:17
Speaker
Or you can even use it
Verification and Interest Processes
00:03:18
Speaker
online. Like you want to go on a website like an Amazon or Swiggy or a Zomato, like a food delivery apps, any of these platforms where while at the time of payment, instead of using your um bank account, UPI, debit, you can actually use your credit card to be able to then make the payment.
00:03:39
Speaker
Yeah. What happens at the back when the credit card is tapped or swiped or and the number is punched? There's a whole bunch of things that happen at the back to be able to verify. Akshay does have the money. It's an authentic card.
00:03:53
Speaker
It's a genuine payment instrument and that's verified. And then the payment goes through where the merchant or let's say, you know, if it's an online delivery app like a Swiggy or a Zomato, they get the money.
00:04:06
Speaker
Um, in a day or two and you because you have a credit line as part of the credit card ah you get time to be able to pay that back, let's say up to 30 days or 40 days as whatever is the credit period, which is interest-free to be able to make the payment, right?
00:04:26
Speaker
And if you make the payment on time, it's a credit, ah there's a free credit period, but you can choose to convert it into an EMI where you can pay it slowly over three months or six months or nine months because you may not be able to pay immediately or If you get delayed and you don't pay on time, then you get charged an interest fee every month where you will have to pay interest to the bank.
00:04:50
Speaker
ah So overall, it's an enabling tool to be able to pay through credit. You don't have to dip into your bank account immediately, but you get a free credit period to be able to make the payment.
00:05:02
Speaker
And then you also get the convenience of carrying a single instrument rather than carrying a lot of cash. It's also a secure instrument because...
00:05:13
Speaker
Money is not immediately deducted when you make a payment. ah There is actually an interest period where money is charged on the card. In case there's a dispute, let's say you've made a payment to a merchant, but the merchant did not deliver your services.
00:05:27
Speaker
Then you have a little bit of time to be able to contest that disputed before you actually make a payment to the credit card. right So and there's a lot of other benefits to be able to use the cards.
00:05:38
Speaker
One of the other benefits, which actually where we all play and whole bunch of other companies play is that the cards also carry rewards. So typically when you just pay cash, you just pay the cash and there's no rewards associated
Evolution and Role of Payment Networks
00:05:51
Speaker
with it. Right. So, uh, but when you use a credit card like a Harj several others, which are out in the market, you also get rewards for your payments.
00:06:01
Speaker
And, uh, that gets it even more attractive in addition to the financial incentives that you get in terms of the credit period or the interest and everything that you get on the credit card payment instrument. So, uh,
00:06:13
Speaker
Overall, this is a credit card. It obviously is a physical card. It a physical instrument ah where it works with certain networks like there's Visa, there's MasterCard, there's Rupe, which is the Indian network.
00:06:27
Speaker
But you also have 16-digit number, which is the digital number which you can punch in everywhere and then use it across without even the physical card, right? ah There's obviously more advances which are happening where...
00:06:40
Speaker
Today you can store that digital card on your phone and then go tap and pay everywhere without even the physical card. But so the the medium and the form factor is evolving. It's ah both a physical card and a digital card. And ah primarily though it's a payment instrument that is quite rewarding and gives a lot of benefits to the customers. Yeah. So that's that's the credit card.
00:07:03
Speaker
What's the role played by a Visa, MasterCard, Rupay, these networks or American Express? Yeah, and good good question. Look, networks are the ones which actually stitch the entire ah payment network coming together. So see, this is a very complex network, right? Let us say you are the shopkeeper. I am the customer, right? You are sitting ah somewhere online and you're collecting payments for your products.
00:07:32
Speaker
I am sitting in a different city. Now, I'm entering a number which then you need to verify it's a genuine card. Anil has the ability to pay and ah when Anil is saying he is going to give you 100 rupees, that 100 rupees is actually something that I am going to be able to receive, right?
00:07:55
Speaker
So ah there are multiple parties involved here. i work with a bank like on my side because i hold a credit card from a certain bank. I have a certain banking partner that has issued my card to me, right?
00:08:09
Speaker
You are the merchant. Now you have a certain bank account for all your acceptance of all the payments. So you have ah your own bank, right? ah So that is called the acquiring bank on your side. you know, on my side, it will be called as the issuing bank.
00:08:25
Speaker
now Your bank may be sitting in ah different country. You may be in Japan. I might be in India. And now these two banks need to be able to talk to each other.
00:08:36
Speaker
So the banks then talk to each other through the network. And, you know, it could be a visa or it could be a MasterCard. Within India, there's obviously Rupe, which actually brings everybody together.
00:08:48
Speaker
ah Even in the UPI world, the UPI... the National Payment Council of India, Corporation of India actually brings puts a network together using UPI, right? So the network is the medium through which the merchants and the customers are able to talk, and the banks are able to talk with each other, verify that this customer is genuine, this merchant has been verified, this money has to go,
00:09:13
Speaker
ah from person A to person B or person A to merchant d And this much amount happened at this time and it's verified. And once the network ah comes in, obviously the banks are able to talk and transfer money to each other through the network, right?
00:09:33
Speaker
And then the banks then indirectly work with either the customer on my side or from your side, the bank will work with you as a merchant. and then deposit that money to you. And then the bank will collect money from me. Right. So, but the network is the medium through which all of this happens and they bring and stitch everybody together and make sure that this money transfer happens in a seamless way without fraud, with, you know, right acceptance, with right diligence that happens legally.
Market Challenges and Co-branding
00:09:59
Speaker
ah and obviously because it's a service, you know, everybody along the chain value chain here takes a little bit of money. Yeah. Yeah. Okay. Got it. Uh, Who are they taking money from? Because as a customer, I'm not paying anything, right? And this is very popular saying that when you're not paying for your product, then it means you are the product.
00:10:19
Speaker
ah Who's paying? Who's paying? multiple Multiple people pay on the in the value chain, but primarily it's the merchant and the customer, right? ah The merchant pays for, you know, every 100 rupees, there's obviously charges that are levied by the network and decided as to ah what the merchant has to give as a cut for the 100 rupees.
00:10:46
Speaker
ah It's ah the merchant charges that are levied and the merchant pays, okay? So that is one part of the value chain where it's monetized and the the the merchant pays.
00:10:58
Speaker
The customer... It's called MDR, right? like Yeah, it's called MDR. So it's called the merchant discount rate. And that eventually then, you know, is the money that actually enters the value chain. And then after that, ah the the network takes some part of it Your bank will take some part of it. The issuer, the customer's bank will take a little bit out of it. So... ah And someone like Skepia will also...
00:11:23
Speaker
yeah We'll we take some part of it from the bank. Then ah because the merchant is paying, most of that then also gets transferred to the customer as rewards and goes into the customer's pocket. Whatever the merchant is able to pay is able to go back to the customers also as rewards.
00:11:41
Speaker
So the customer until that point doesn't pay, but is actually receiving a lot of value in addition to what they are actually paying for the product or the service. ah the more the customer pays when they want to convert it into EMI and then pays it slowly because then they have to pay interest because yeah I mean then you're also getting a lot of value out of it, right? You're like trying to, you know, pay it over three months or six months versus paying immediately. And, uh, there is a time value of money. So if you don't pay money on time, then you have to pay some interest fees, but the customer then pays at that point.
00:12:16
Speaker
Uh, there's also customers, uh, payments for, various, um, like fee services. For example, if um Sometimes I'm availing an EMI. I might have to pay an EMI conversion fee. If I'm canceling the EMI, I might have to kind pay for the cancellation.
00:12:34
Speaker
If I lost my card, yeah late fees, late fees again is similar to me not paying on time. So there's basically interest that I'm paying. It's it's a form of interest. Sometimes you've lost your card and you need to get a replacement card. Then you have to pay for the replacement card. So there is various other fees that the customer has to pay, but primarily...
00:12:53
Speaker
Customer gets a lot of value through rewards. If the customer is paying everything on time, then they don't accrue any extra charges. Sometimes you have to pay for the card itself. There's a joining fee or an annual fee.
00:13:04
Speaker
In our case, we don't charge either. ah But sometimes you to pay for the card itself because the card is giving you a lot of benefits and you want you want the customer to be paying for that.
00:13:16
Speaker
And then outside that, there's also a set of services for which the customer pays. So ah yeah, that's, that's basically how the money flow typically happens. Yeah. What do the numbers look like? If i if there's a hundred rupee transaction, what is the MDR, the merchant discount rate?
00:13:31
Speaker
And how is that split? That, that varies a lot. but There's no defined number, right? You'll have to look at what, what is the nature of the category? There's a whole bunch of category definitions, which are called MCCs and MIDs, which are defined by the network. I know there's a merchant and category code.
00:13:50
Speaker
And every merchant category code has a determined set of charges which are ah levied by the network. So if it is a rent or a utility, it's something, it's ah it's a shopping, something else. If it's a travel, is something else on restaurant, it's something else. So every category on each of these merchant category codes has a different charge.
00:14:12
Speaker
And it can vary anywhere, you know, sometimes it's 0.5, 0.7%, sometimes it can go up to 1.52%. So it's a blend of various charges. So there's no fixed determined charge and each network has the prerogative to charge whatever rate that they want.
00:14:27
Speaker
Yeah. And how is that split? How is the pie split between different players? um different players, ah like, look, again, there's, you know, every part of the value chain, there is a bit of charges that, you know, everybody takes, whether it's, see, sometimes you are an online merchant, then there's a payment gateway that you use.
00:14:47
Speaker
And the payment gateway will take a little bit of money, right? know I mean, this will be, I would say you know, very, very small amount of charges every at every part of the value chain.
00:14:59
Speaker
Most of the money is written retained by ah issuing bank, which actually is, you know, taking all the risk on behalf of the customer to be able to get the customer to pay on time.
00:15:12
Speaker
And eventually that flows back to the customer. But, Every part of the value chain, you know, people may make either some 5 bips or 10 bips or 20 bips. It depends on various players. I mean, again, ah there is no like a fixed number that everybody charges. It's again, then the network, what they can command and, you know, each payment gateway, what they negotiate with each of the merchants, ah how they can actually bring all of that together. So it again comes down to what each party decides with each other and what those rates are. eight south Yeah.
00:15:45
Speaker
yeah Who foots the bill for the benefits and the rewards? Like the bank is putting that bill or they're passing on the margin to you and you're putting the bill? ah The bank is the one who actually determines all the rewards and all the ah benefits for the customer. But obviously, because you're a co-brand card, the bank and us work together and we we craft it together and make sure that the customer has a very good ah card with a lot of benefits that they can enjoy.
00:16:14
Speaker
ah So because it's a co-brand, typically, if it's not a co-brand where the bank is doing a card on their own, Then they decided unilaterally and said, this is what we want to give.
00:16:25
Speaker
But because it's a co-brand card, both of us sit on the ah discussion table as good business partners and then craft it together and say, let's make this card work for the customer, which will make it quite attractive.
00:16:38
Speaker
ah Then what is it that the bank is able to foot? What is it that we are able to foot? And then bring it all together and offer it to the customer. So ah it's like any good business partnership to be two parties coming together and making it happen.
00:16:54
Speaker
Yeah. Yeah. What's the hard thing about selling credit cards to Indian consumers? You know, for someone who's sitting on the outside, one might feel like everybody wants a credit card, so it shouldn't be hard to sell a card. But I'm sure from the inside, you understand the challenges.
00:17:11
Speaker
So what are some of those challenges of selling credit cards? Actually, it's not that easy. You know, you might think that everybody wants a card and, ah you know, is it's it feels like it's very straightforward to sell the card. Look,
00:17:25
Speaker
You have to come from the consumer angle first. and You have to see what is the customer going to really like? What is the what is the market looking like? you know Customer has plenty of options. like i know There's hundreds of cards.
00:17:39
Speaker
When there are hundreds of cards and options, your ability to then sell has to be very, very good from how are you differentiated? What is it that you will cater to? Who is it that you will cater to?
00:17:53
Speaker
What are the benefits that will make it attractive? And hence, what messaging and communication do I want to then ah put out there, which will then cut through all the noise and then they're able to hear you very sharply, clearly saying, ah i am that customer.
00:18:08
Speaker
yeah i find your card very attractive and I would like to really get your product. ah But even then, there'll be multiple options even for that one single product segment or one that customer.
00:18:21
Speaker
So it is actually not that easy. It's a very crowded market. There are a lot of options for the customer, multiple banks, multiple co-branded cards ah with various segments. you know Customer also is not a unilaterally...
00:18:36
Speaker
a customer where I'll say I'm a traveler, right? They are probably a traveler, but they also enjoy food. They also are doing shopping. They are also, you know, are doing, you know, let's say their grocery, you know, purchases every week and every month.
00:18:49
Speaker
So the customer also is going across segments and has a lot of choices. So you have to be very sharp. You have to figure out what is your what is your product? What is your offering? Who is your customer? How is it attractive?
00:19:02
Speaker
How are you going to make it better than anything else out in the market? Give them a very, very good experience. only then they'll come and take yours. Even when they're coming and taking it, how seamless is the onboarding application process?
00:19:16
Speaker
Are you going to make it a paper application where people have to get it after one week or 10 days? Or are you going to make it a 5-10 minute online application where they can go through this very seamlessly and say, okay, your card is approved, not approved, you're eligible for this or not eligible.
00:19:29
Speaker
And then How easy or delightful is it when you receive it, when you start using it, whether the card is being accepted everywhere, what kind of features and benefits you provide on the card.
00:19:40
Speaker
All of that comes together, right? I mean, it's not... People think selling the card is... Just a a one-time affair. I'll just sell the card and then, you know, it's there in the wallet and people keep using it.
00:19:52
Speaker
But it's actually ah continuous service to the customer, right? So the bank and us work ah very diligently to make sure that the customer... ah product enjoys the product on a continuous basis. We keep innovating because we have to retain the right for the card to be in the wallet and continuously used. It's not just selling once and then moving on. So...
00:20:15
Speaker
ah Yeah, it's it's ah it's it's ah not that easy to be able to sell a card or any financial instrument or any product in the country to customers.
Innovation and Customer Experience
00:20:28
Speaker
ah You have to be very, very sharp to be able to get the customer's mind share and then be able to win their time and affection towards your product.
00:20:39
Speaker
Yeah. Do you look at, you know, social media companies look at metrics like the Dow, Mao, daily active user, monthly active user, stuff like that. Are those metrics relevant for card companies also?
00:20:52
Speaker
Yeah, look, we are we we ah we arere a card company, but we also are a card company which has travel as our differentiation. And our customers come and...
00:21:04
Speaker
you know, redeem their rewards on our travel. And even when they don't have rewards, because they like our travel offering quite a bit, they come and book travel on our platform, right? So what we measure are multiple metrics, right?
00:21:19
Speaker
How many customers do we have? How often are they using the card in terms of the number of transactions? How much are they spending every month? ah how much are they coming onto the app and ah using all the features or checking out all the features?
00:21:35
Speaker
How good is our travel and how many times are they traveling per month? ah how ah how How are they referring others and how is how how good is the word of mouth and ah how organic is it versus we having to scream and people coming? so How do you measure word of mouth?
00:21:58
Speaker
we see how many customers are just downloading our app without any advertisement organically. Ah, okay. Yeah. okay So, all of these, like, you know, some of the metrics like you mentioned in terms of DAO, MOV and all the stuff are also metrics we look at, but...
00:22:12
Speaker
ah They are not the primary metrics. They are probably ah ah's secondary metrics for us. Obviously, if the card is being used a lot, the app is being ah used often to be able to check the transactions, make the payments, the the the but travel is being used often.
00:22:30
Speaker
Those are all the core metrics along with the number of customers who are doing all the stuff. ah But then the DAO, MOV and all of that are input metrics towards a lot of those business metrics that I mentioned. yeah or Do you monetize your travel booking service?
00:22:48
Speaker
We do, obviously. we look at the way our business model is that we work with the bank to be able to give the card. Now the card obviously has its own P&L where we get you know income from the transactions.
00:23:02
Speaker
ah So that is one part of the monetization. That's one part of the P&L. ah the customer then gets all these rewards. And then when they have these rewards, they keep accumulating it. And then they use it to book travel.
00:23:14
Speaker
ah Today, we have, you know, multiple categories. We have flights on our platform. We have ah hotels. We have buses. We have trains. We provide travel visa services.
00:23:27
Speaker
We also sell packages, what we call KPI Unmapped, to customers where they can go on a trip with others, right? Now, these are all the travel offerings that we provide. When a customer comes and makes a travel booking on our platform,
00:23:40
Speaker
ah We do get some income from being able to sell a certain ticket or a certain package or a certain visa. ah There are fees that we are able to get as part of selling you know that travel service. it's a It's like any commerce income that we get.
00:23:58
Speaker
Now, that is another monetization. And we take that monetization along with the card monetization, combine the P&L, and then because you are able to get both, we are able to then pass on more value to the customer also.
00:24:10
Speaker
And then the customer gets a lot more on the card and the card becomes a lot more attractive. So ah it is it is actually two P&Ls coming together to be able to give more to the customer and ah we also being more sustainable because of that. yeah yeah What's the moat for a credit card company? Yeah.
00:24:34
Speaker
A lot of things you mentioned, like a seamless application process. This is table sticks, right? I think every bank today offers this seamless application process, unless it's like a PSU bank or something. But most private sector banks have that.
00:24:49
Speaker
oh yeah All banks are competing on rewards, although the level is different. but the but So what's the most? Yeah. No, good question. Good question. i Actually, due respect, I don't think every application right now in the country or all the process in the country are table stakes. Unfortunately, they're supposed to be table stakes.
00:25:09
Speaker
But look, I think if you look at the entire credit card in terms of how the experience is, it's actually highly variable. Today, ah the application process for many, many, many, many banks and cards is actually Very, very tough.
00:25:28
Speaker
I get a lot of emails from our customers every day and every month. In fact, one of the first thing they say what a beautiful, easy application process. Thank you so much. yeah ah See, when a credit card application ah ah you you have to go through, there's a lot of stuff that you need to fill because you need to be able to give bank confidence that You're credit worthy. You are who you are. In case you default on a payment, then somebody from the bank can come and do a collection and then come to your doorstep and collect the money. So there's a lot of stuff that you need to do. you need There is a KYC process.
00:26:04
Speaker
And all of this can look quite daunting, right? i mean On a paper, you know, people may have somebody fill out for them, then that's easy. But when you're doing it on a mobile application or, ah you know, on a web application, it's not that...
00:26:18
Speaker
It is appears to be straightforward, but most people actually don't do it well. And then being able to have the right KYC and checking everything digitally and doing a video KYC, doing it 24-7, all the stuff appears table stakes, but it's not. okay Then even after you get the card, ability to see your transactions real time.
00:26:41
Speaker
Today on our card, we have worked with the bank to make sure that when a customer taps the card, as soon as the card is tapped, within a few milliseconds or a second, the transaction appears on the app. So let's say you're abroad.
00:26:54
Speaker
Let's say you're abroad and you are spending in Japan and you want to spend 100 yen. Now, you are earning in rupees, you are paying in rupees. You want to know when I spend 100 yen, how much am I being charged?
00:27:09
Speaker
Now that confidence of how much am I being charged on 100 yen is not something that everybody gets. Most banks typically send you a statement after 30 days or 45 days and say this was what they're going to be charged. This was the markup. This was the rate.
00:27:20
Speaker
You don't know what before the rate is. Now we have taken this problem statement and addressed it head on where on our app when you log on you can actually check today how much is 100 yen and what am I going to be charged before.
00:27:38
Speaker
before it is tapped. So we give you that level of trust and confidence. Then you take the card and let us say you're in Tokyo and you want to tap and you get charged 100 yen.
00:27:50
Speaker
As soon as you tap 100 yen, real time, you can open your app and see in how many rupees you are charged what.
00:28:03
Speaker
And that number will show up as rupees exactly. And that is what will come on your statement. That is what you will pay in the end. It seems straightforward, but almost all apps and banks in the country today do not show this real-time status and what is the currency and conversion and all this stuff.
00:28:21
Speaker
Now, I'm giving you only one such example of a foreign transaction. right Now, take the ability to repay your bill. Right? Today, unfortunately, and it's a shame that most people have to use a third party app to be able to repay their bills of their credit cards.
00:28:39
Speaker
They unfortunately cannot open their banking app and then pay their bill on there. But again, we have invested and made sure that our repayment on our app is extremely seamless and being able to pay as soon as you pay.
00:28:53
Speaker
You don't have to wait for a day or two for the money to settle and all this stuff. You pay, let's say, 100 rupees, 1,000 rupees, 1,000,000, whatever you've made, it will reflect immediately on your credit line and it will say payment has been received.
00:29:06
Speaker
ah It should be ideally stable stakes, but unfortunately it is not. And we have invested across the value chain of the credit cards to make it seamless. Even rewards, right? It is extremely non-transparent when let's say you spend 1 lakh rupees, you're supposed to get let's say, you know, 2,000 rupees worth of rewards.
00:29:27
Speaker
How many coins are you receiving? For what transaction are you receiving? For what transaction are you not receiving? How much are you supposed to? And have you given you that? What is your ledger in terms of ah what was the balance last month?
00:29:39
Speaker
How much are you getting this month? And Being able to see that very, very clearly, right? That comes in some statement somewhere. We are able to show it on every transaction as in when you tap gives a lot of confidence.
00:29:51
Speaker
Then the ability to redeem this also. See, banks unfortunately play only on breakage. Breakage means what? Let's say you have 100 loyalty coins, but most likely if you don't give you a good experience, then you will not end up using it.
00:30:04
Speaker
Only 50 of you will use it. The remaining 50 of you, the coins will expire and I'll make money because I you have not ended up using it. But we have we have taken a counter view and said, we will make it super easy for the customer to be able to redeem what is actually their own money, that 100 coins that they have or that whatever that is there in their wallet.
00:30:23
Speaker
And very delightfully just press a button, it toggles and then you can say, book your flight, book your hotel, book your train, whatever it is and redeem. And that...
00:30:35
Speaker
delightful experience along with all the value then makes the customer more and more loyal and attracts the customer to using our product and also then generating a lot of word of mouth for the other. So ah actually, unfortunately, not only in India, by the way, world over,
00:30:53
Speaker
ah the experience that people get today in the ah not only credit cards, but even other financial products and services is is not that good. And that's where we fintechs come in and, you know, we are able to provide a new age experience that, you know, gen Z's and millennials really love. And then ah that's that's that's what makes them use our product and and love it. Yeah.
00:31:18
Speaker
I guess that's the reason why credit exists, right? Because the customer experience is broken. Yeah, like but that's what I was saying. like For example, on the repayment side, right very few people ah get the repayment really, really right. And they have built the entire brand over the last ah seven eight years saying, you know, come and repay your bills on our app.
00:31:41
Speaker
So, what... What you're mentioning is one part of the value chain. But if you look at the entire part of the process, whether it's from application, repayment, seeing the transactions, seeing the rates, paying the rewards, all of that, every part of it, unfortunately, is broken.
00:31:58
Speaker
But very diligently, we have crafted at every step how we can make it much, much, much, much better and ensure the customer has a very good experience. Even our unboxing, how you receive the product,
00:32:10
Speaker
ah we have We have taken a lot of time and effort. I'll just show you the unboxing. um Look, this is this is our brand, Scapia, right? and and And, you know, if you can see the recording, it says go places.
00:32:33
Speaker
Yeah, so the kind of ah kind of design and time and effort that you've taken to make sure the customer has a good experience and this is the card when you unbox and ah how the card is designed, right? How it's unboxed.
00:32:50
Speaker
These are all, you know, things that... You're supposed to enjoy, right? You're supposed to use it along and the customer is paying you or wanting your product. Then you make it quite delightful at every part of the step, right? So that's what we spend a lot of time and effort in making sure the customer gets. Yeah.
00:33:06
Speaker
Okay. i Now I understand how you had sets. and So you you had like a 9 million seed and then a 23 million series A not too long after.
00:33:17
Speaker
So yeah, I can see what the VC funds must have seen. that This is pretty impressive. oh
00:33:27
Speaker
I want to also understand what a VC fund would have seen as impressive from the economics of it. Like what what is like the CAC to LTV ratio? i think that's like the golden ratio for a VC fund to look at, right? So typically what what does the CAC look like in, and CAC like customer acquisition costs. So in this credit card space, what is typically CAC?
00:33:47
Speaker
Does it vary from one player to the other or it's? it did does very It does vary from one bank to the other. See, you have to think of it this way to,
00:33:57
Speaker
ah what what you're asking is but actually the most pertinent question, right? how How much money are you spending to be able to acquire every customer? And then how much money are you then able to get from every customer through the lifetime of them being with you, right?
00:34:13
Speaker
Now, the CAC, the customer acquisition cost, which is a number... It's an outcome. Most people think it's actually an input as how much money that you need to spend to acquire the customer.
00:34:30
Speaker
But it's actually counterintuitive. If you build a very good product, if you make it very, very attractive, if...
00:34:42
Speaker
Akshay as a customer loves it so much that he'll go tell his friend that, oh my God, I downloaded Skpi. I loved it so much, but let me go get my friend. Then the CAC becomes an output metric.
00:34:54
Speaker
Why? Because your product is leading your marketing. Your design is doing and lot of the marketing. your customer service is doing all the marketing, your, your whole product and the entire company is then driving your CAC down, right?
00:35:12
Speaker
Obviously you also need to make noise and, you know, shout and say, hello, i am Scapia. You may not have heard about me, but this is who I am and this is what we offer. And, you know, we would love to, for you to try our product.
00:35:27
Speaker
Uh, But that's the second part of it.
Building Partnerships and Travel Integration
00:35:30
Speaker
The primary way to actually build a brand and a product is actually through what you put out there. then Then it's about how much you scream, what you scream and how much brand money you spend. So the CAC is an outcome, is an output based on what you do and the number varies.
00:35:48
Speaker
And the better your product is, the CAC comes down, right? Now that is the... CAC part of it. Now to your question on the LTV part of it, LTV again is an outcome of how loyal is the customer and how much are they using your product throughout, right?
00:36:06
Speaker
This is solely determined by how good is your product, how good is your customer service and how much are you able to make the customer enjoy your product and continuously use it throughout the lifetime.
00:36:20
Speaker
So that is where we spend a lot of time on. For example, on the card, we have not stopped with some of the... We are the only card in the country where in addition for the because in addition to customers actually using the lounge, we also give the customer the ability to go to any restaurant or any outlet at the airport across 99 airports...
00:36:44
Speaker
to tap their card and get money back in the form of coins for what they're spending at the airport instead of going to lounge. So I might get a i' at go to the lounge just for free food. But today the lounges are getting crowded, long lines. Sometimes they're even messy.
00:37:01
Speaker
I might actually go with a family member and they may not have lounge access. But the two of us can go to a nice restaurant, sit down, order. But as soon as I tap the card, then I get money back in the form of coins.
00:37:13
Speaker
Then my meal is paid for. And my purpose of having gone to the lounge is also served by that, right? So... But sometimes you may not want to go eat because I might go going onto a flight or I might have come from home and my mother may have given me good food and I don't want to eat food.
00:37:30
Speaker
Then I might use this benefit now to go buy some gift for a loved one, whatever trip I'm going and then buy that. right So this is an innovation. We call it airport privileges. This is what brings more and more loyalty.
00:37:42
Speaker
Now, when we launched the cart, we had only flights and hotels. But over the course of the last year, we have now added four more categories. Why? Because the customer now has more choice for the card.
00:37:53
Speaker
So all of these, as we keep doing more and more innovations, more and more product launches, the customer has more and more reasons for them to use our product. and And that is how the LTV keeps increasing, right? So the CAC and the LTV are outcomes of all the inputs that you do on all of these things.
00:38:12
Speaker
So this is what any investor would see or me as a founder to be able to build a responsible business. I have to look at these and make sure that they are healthy. And ah you build a good, delightful product that customers love and that eventually will lead to good, low cost acquisition and high retention with loyalty. So again, as simple as it sounds, but you have to make sure all of this happens and comes together.
00:38:38
Speaker
Yeah, yeah. Let's say someone like Bajaj, which I think would probably be one of the largest issuers of cards. How would their card be?
00:38:52
Speaker
Bajaj, I think their card has been stopped recently. I don't think they do any more co-branded cards, if I'm not wrong. But look, I think it it all varies. But think banks typically spend 3,000 to 3,500 rupees.
00:39:05
Speaker
per card, per customer when they acquire them. and yeah so And this cost is the sum of digital marketing plus sales? All put together. It could be sales, it could be digital marketing, it could be, yeah, it could be all of it put together. Yeah, yeah, yeah.
00:39:20
Speaker
Okay. Yeah. So yeah what you're saying is that you don't look at CAC, as the right metric, it's an outcome because even customer service is contributing to CAC in a way. yeah Yeah, yeah, yeah. But I don't, I'm not saying it's not the right metric. I'm just saying it's a metric that is determined by a lot of things.
00:39:39
Speaker
People just, unfortunately, just look at CAC as a single number. That is how much am I spending to acquire the customer? But these are all intertwined. You know, how much am I spending on design and product also determines your CAC.
00:39:54
Speaker
yeah yeah yeah And what's your CAC, like compared to that 3,000, 3,500 of the bank? It's a number that I don't, yeah, it is lower, but we don't disclose it anywhere. Significantly lower.
00:40:06
Speaker
It is lower, yeah, it is lower. But again, we do, we do, like... I'd rather spend more on giving bad value back to the customer in terms of rewards and the benefits and then giving a lot of value there.
00:40:21
Speaker
So then that drives the CAC down versus spending a lot of CAC versus not giving value to the customer. So it's again, all of these are trade-offs. Yeah. and Right. Right.
00:40:32
Speaker
Fascinating. And typically what's the long-term value of a card customer? See, typically customers... industry like See, typically the customers keep a card for a very long time. See, nobody likes to switch these things. Like, I mean, you've taken a lot of effort filling an application form, you've gotten a product, and then it is in your wallet. So, most customers typically retain a card from anywhere six to eight years or nine years. And so ah the lifetime value ah of the card can be quite high. But again, that number is shrinking. That period is shrinking.
00:41:05
Speaker
Customers are getting a lot more choice. There's a lot more awareness and there's a lot of new innovation coming. So you cannot take that for granted. You will have to make sure that you're able to retain customers for as long as possible.
00:41:19
Speaker
Like before, for example, you know, ah some of the devices and all this stuff, people would retain for many years, right Like whether it was a TV or a fridge and all this stuff, people would keep that for 10, 20 years. now people are changing every TV for every four years or five years, right?
00:41:34
Speaker
Mobile phones are changing every two years. So the cards also will see some shrinking in terms of how often they'll change. ah So it'll come down to What are you offering that can keep them ah continuously hooked and be able to use it?
00:41:51
Speaker
um So, yeah, we're quite early in our journey, but I think we're quite confident given our rate of innovation and what you're putting out there that we'll be able to retain the customers for a long time. But of of course,
00:42:05
Speaker
we we want to make sure we don't take it for granted and we, we, we rather earn that loyalty rather than just take it for granted.
00:42:16
Speaker
Yeah. Yeah. Okay. I'm still trying to kind of pin down a number here. Like what's the typical, I mean, for your company, but in general for the industry. Yeah.
00:42:30
Speaker
See, typically, you know, let me put it this way. Typically, most cards would break even in about three years or so after the customer is acquired.
00:42:41
Speaker
So now you can... That's very wrong. Yeah, that's very wrong. You have to be patient. Yeah, you have to be patient. You cannot you cannot expect the card to break even so quickly. So it takes some time.
00:42:52
Speaker
ah like Sometimes it can be as low as two years, but... getting break-even so early is not that easy. So it's an investment. Most people don't realize this, but getting a customer to come and use your product is an investment. And that payback happens after several years.
00:43:10
Speaker
And you don't get the full reward of it and unless the customer stays with you for five, seven, eight years or so. Yeah. So um that has to play out. So you'll have to make sure that you are able to retain the customer for soon.
00:43:24
Speaker
Yeah. you know Okay. were speaking of the airport like a reimbursement, like like in a way the coins. think but you So you put the entire bill?
00:43:36
Speaker
Yeah, up to a certain value. we So upre up to about thousand rupees worth of the bill we do foot. ah ah So the customer goes to the restaurant and let's say they have 800 rupee meal. you know Let's say a couple of masala dosas.
00:43:52
Speaker
Let's say a couple of masala dosas. Then in a coffee, everything put together 800 rupees. Then ah that 800 rupee, as soon as you tap. So what we have done is on the app, you...
00:44:04
Speaker
ah you open the app, we know that you're at the Bangalore airport so that there's no fraud, right? So we are able to check. And if you booked a flight ticket through us, that we're able to leave read the boarding pass and that you're going from Bangalore to Delhi at this time of the day, at this time of the hour, and you choose which restaurant are you going to go have your meal, as soon as you tap at that restaurant,
00:44:28
Speaker
800 rupees worth of coins will come back to you immediately to your wallet. Yeah. So that's what it's what you call it. Does the merchant subsidize this or like this is entirely paid by you at the bank?
00:44:41
Speaker
No, we are, we we and the bank are are doing it at this point. We are of course ah working with some merchants where we are able to get a little bit more benefit to the customers.
00:44:52
Speaker
But most of it we are funding right now. Yeah. so Okay. ah How do you stitch together the reward program? Like, ah are there aggregators to whom you can go and they can stitch together a reward program for you or you have to go lounge by lounge and how does that happen?
00:45:10
Speaker
Look, a lot of it is changing. See, reward programs, obviously, ah what we offer as rewards primarily is actually ah coins and our loyalty, right? Currency. So, for the customer, every transaction that they tap, they earn some loyalty coins and that,
00:45:25
Speaker
ah is something that we have put together. It's our loyalty program working with the bank. And then we have put together an entire travel platform, fully ground up ourselves across all of these categories.
00:45:37
Speaker
You, of course, can use aggregators for any of this stuff, right? Banks do. And banks work with whole bunch of reward partners and all of that stuff. But typically, those are the experience breaks and becomes a mess. Because once you hand over from one party to another party to another party,
00:45:53
Speaker
you know, the experience is not as seamless. and So we have actually built this ground up and built it in-house so that we are able to offer the customer a seamless experience.
00:46:05
Speaker
We have tied up with all the lounges directly and working with all of them. Again, there are aggregators, but we go directly to all of the lounge operators and then able to stitch everything together.
00:46:17
Speaker
So we work with our network partners and the bank and then we offer a zero forex markup on our card as well. So ah different players take different approaches, but think of us as a unique player where We like to do all of these ourselves because we are able to make the customer experience a lot better.
00:46:40
Speaker
Because we are able to do it ourselves also, we capture more on the value chain and we are able to give back more value to the customer. model So, yeah. So, the travel portal, I know for flights, like there is this Amadeus, Galileo, you can... and So, it's not that hard to sell flight tickets. But for hotels...
00:47:01
Speaker
Do you have go and hire? Yeah. Yeah. in In fact, even flights is not that easy. ri I mean, it's like selling domestic flights may be easy, but getting all the international flights, giving them the various options, various fare families, what is the cancellation, reschedule.
00:47:20
Speaker
Look, in travel, to be able to serve the customer when everything is going right is actually quite easy But what is much harder is when something goes wrong during travel, before travel, after you come back, whatever it is, that's when you will get tested as a brand.
00:47:46
Speaker
At that point, whether you have all the right connections and the right integrations and the right ability to service and make sure you can take care of the customer and make sure they are able to service them well is what really matters, right? That is where trust actually gets tested.
00:48:01
Speaker
ah It's easy to issue a ticket, but it's it's tougher to take care of the thing when something bad happens. ah So again, we work with multiple clients operators directly across all of these categories. Like, you know, for trains, for example, we work with IRCTC directly, right? With buses, we work with, you know, hundreds of operators and for hotels, you know, a lot of chains and, you know, obviously we do use some intermediaries from time to time to be able to get some aggregation going because it's quite impossible to work with
00:48:33
Speaker
you know, every single hotel year. The long-term. Yeah, the long-term and all the stuff. But, so we do aggregate supply. We work, you know, ah we do have ah supply teams that work with all of these merchants across in the travel value chain and bring that offering to the customer.
00:48:50
Speaker
Like, for example, a travel visa. Like a full-fledged travel tech, not just a fintech. Yes, we are both a travel platform and a fintech. So we call ourselves a travel fintech. We're quite unique. Around the beginning of the company,
00:49:03
Speaker
We have been building both ground up and making it come together. ah For example, on visas, right? We have built now the expertise for us to be able to tell the customer, if you have to go to Tanzania or if you have to go to Japan, what are the visa documents? What do you need to apply? what do you and When do you need to apply? How do you need to do that?
00:49:27
Speaker
We have gone deep now, for example, to take a photo, we'll take a selfie through the app and then that will get converted automatically to a passport photo of the requirement of that country and the embassy.
00:49:40
Speaker
You just take a scan of the passport. It will read all the information and fill the form. Then an agent will work with the customer to get the full form submitted, filled and submitted, verified.
00:49:51
Speaker
And then we also tied up with, you know, ah one of the most, ah I would say, trusted delivery and pickup partner for passports where they come to your house, pick up the passport, submit it to the consulate, then also deliver it back.
00:50:08
Speaker
The only time you might have to move is if you have to do some fingerprints or thumb like you know some biometrics which a consulate will ask in certain situations. So we have gone that deep and built that expertise now to be able to deliver. We don't use third parties is and because we want to be able to serve the customer fully well ourselves. So that's that's how deep we go.
00:50:29
Speaker
Why don't you open this up as a service for everyone? like I would love to use this. Yeah. We would love for a lot of folks to continue using it. At this point, look, we want to only offer this as a privilege to our co-branded card customers.
00:50:46
Speaker
We want the customers to come and get our card and then ah they use the card on a regular basis. Then they also accrue a lot of value, right? Because they're using the card, collecting the points. Then you know, their travel becomes even more cheaper.
00:50:59
Speaker
Right. So, ah we want to... But you don't think this could be a third P&L for you? like Like a travel portal? It's already a second P&L. It's already a second P&L. Yeah. like Look, at this point, we want to be focused as a company to be able to ah get the customers to enjoy our card and then use that for travel.
00:51:23
Speaker
ah Building a travel business independently and then screaming about it and getting customers to come to it directly a very different business. It's a different business and it's it's a different battle like you said.
00:51:37
Speaker
ah it's important to be sharp and fight, you know, only battles that you can potentially win, right? So even winning this kind of a battle itself is, you know, is quite hard, right? So rather be focused and do well at it.
00:51:51
Speaker
Yeah. yeah What's the GMV of your travel business? We don't disclose asme and let this let's just say. I know you're asking all the right questions. I'm sorry I'm not revealing a lot of this some point and we go At some point when we go public, all of this stuff will be available to people. But let's just say that growing...
00:52:17
Speaker
um we are growing ah you know, 20 to 30% month on month, which is gro which is its a it is a phenomenal metric. that's ah that's just yeah That's quite good growth. And whether it's our cards and spends and travel in terms of each of the categories.
00:52:38
Speaker
Look, there are many players in the travel industry in India where they have built some categories or the other. ah I'm quite proud ah to say that in the last three years, we have built a whole suite and each of the categories is doing well ah from the customer base, whether it's the flights, whether it's hotels, whether it's buses, trains, visas, all of them are seeing good traction.
00:53:04
Speaker
Of course, different customers want different modes of transport or travel, right? I mean, I might be a regular train customer, let's say when I'm going from Bangalore to Chennai. But when I'm going from Bangalore to Delhi, I might take a flight, right? Or if I'm not getting the train because I've not thought about it well in advance, I might take an overnight bus, right?
00:53:23
Speaker
For a corporate trip, I might choose a certain type of a hotel in a city. But when a leisure trip with my family, I might spend a little bit more and go to a resort. So you need to be able to serve the customer for their various needs.
00:53:36
Speaker
And... You know, in just three years, we have been able to build out this entire suite in the country. And there are very few OTAs in the country which have built out this level of depth and breadth in the travel offerings. Yeah.
00:53:50
Speaker
And we're not stopping, by the way.
Anil's Entrepreneurial Journey and Lessons
00:53:52
Speaker
In a couple of months, we're going to launch two more two more categories. We're going to continuously launch more and more for the customer to be able to continue to enjoy our product.
00:54:02
Speaker
Yeah. yeah but this Visa is a paid service, like the visa facilitation. Yeah, it's a paid service. you you get you we day The customer pays obviously a certain fee which goes to the consulate, but we also charge a certain convenience fee for the customer to be able to avail the service. I mean, I genuinely believe that when you're doing something valuable for the customer, the customer will be happy to pay for that because they also seen that the platform is doing, the platform is doing some good work for them, right? So we do charge a nominal fee.
00:54:37
Speaker
and We don't charge too much, but we charge a nominal fee for ah some of these services. Yeah. The, the Forex bar cap, like when you're spending in other countries, does that add to your PNL or that's only with the bank?
00:54:51
Speaker
Like the bank would typically, while converting, Our card actually has a zero forex markup. We do not charge any markup for the customer when they are actually tapping the card abroad.
00:55:04
Speaker
So neither the bank nor us is actually earning any money. The customer actually saves a lot of value by not having to pay for a markup. ah Markup is a big pain point and customers hate paying that markup.
00:55:17
Speaker
Because it's not transparent and you don't know what it is. and Yeah, and also why charge a markup for some somebody using your product on something like this, right? So we are one of the few products within in the country which also offers 0 forex markup and people are using it up abroad.
00:55:33
Speaker
yeah so Okay, yeah amazing. Why do you call it a Scapia? Yeah. It's not an easy name. it's It's actually an easy name. i Look, at it the root is escape.
00:55:45
Speaker
ah The root is escape. We wanted to... okay the the We wanted to... build on something travel and, uh, look, everybody wants a break and wants to travel. And we were looking for words that denote travel.
00:55:58
Speaker
Uh, escape was the route and, uh, uh, we were looking for various, i would say words, which, which sound similar, but not necessarily the same. So escape escapeia is something that I didn't like. And I dropped the, added an found the domain.
00:56:15
Speaker
And, uh, now I think, uh, a lot of the Indian customers know our brand and know the word. Yeah. So, yeah. So I think there's some, some folks are confused whether to call it scapia or scapia and, uh, fun game that happens sometimes. ah But, yeah, I see the word is scapia and, uh, uh, that's what it is. Yeah.
00:56:38
Speaker
Yeah. Okay. ah Take me back to starting off, uh, scapia. So, uh, You were already running a venture prior to that. And before that, also you worked in Flipkart for a fairly long time. yeah What's been your journey? Just take me through that.
00:56:57
Speaker
ah Look, actually, I've always wanted to be an entrepreneur. I mean, not many people know this, but when I was in college, i started in ITM and RAS. I started one of ah started a venture during this was the dot-com period.
00:57:12
Speaker
a bunch of friends coming together, started a company and, you know, obviously didn't go anywhere, but I shut it down, but it's good learning, right? As a kid, as a student, you're trying to do some startups and all of this stuff and was that This is before even startups became startups, right? is i'm I'm talking about 2001 or something like that, right?
00:57:31
Speaker
um Then, Then, yeah, like, you know, when i was and I was working in my first job at Qualcomm, again, I started another non-profit because I wanted to give back to India while living in the US and a bunch of us came together. And over two, three years, we actually raised a lot of money in the US and sent back money to schools and, you know, for education, healthcare in India. we did We did that. But then family life and everything became busy. So all of us decided, ok okay, we'll continue this non-profit a little bit later.
00:58:04
Speaker
and Then I did business school. And during business school, again, I started another company where iPad had just come and we started a music magazine for the iPad. In fact, our app was featured by Apple all over Chicago. and And these days, something like that happens. You'll receive a lot of funding. but you know yeah like But again, these are all as students. You know you you do...
00:58:27
Speaker
I like you. I always had the entrepreneur in me, I would say to, ah to start something, build something and put it in the hands of millions of customers. I've always had that desire. Um, but I thought the best way after business school to be able to learn how to do all this stuff was to join a company like Flipkart, which is a one one of the, I would say the,
00:58:50
Speaker
um one of the first companies in India, which actually inspired multiple folks to become entrepreneurs, right? Today, I can proudly say that any B2C company you take in India, there will be some flipster there doing something because we've all we've all had our upbringing and learning in that ecosystem of,
00:59:09
Speaker
you know, how to build at scale B2C brands and companies offering those services. A lot of the flip card mafia. Yeah. If you were to use that phrase, yes. Yeah. yeah And I'll tell you why,
00:59:24
Speaker
all of us also had a lot of that upbringing. See, when we all started and worked in Flipkart at that time, there was no cloud. You know, Flipkart had to build the cloud. There was no payment gateway services is just coming up.
00:59:36
Speaker
There was no supply chain. You had to build the supply chain everything yourself. There were no e-commerce category managers in the market. We all had to learn category management on our own. There was no defined way to build product. We were learning.
00:59:49
Speaker
So when you are in an ambiguous environment where nothing is defined, you learn how to deal with ambiguity and solve the problem and build things ground up. So you build that skill, right? So I actually thought I'll stay in Flipkart for two, three years and become an entrepreneur. But the journey was so good. I stayed there for eight, nine years, learned a lot of things, handled a lot of scale, handled some large teams, helped with a bunch of fundraisers. think for large part of your career, you were in like a category management role, right? Yeah.
01:00:19
Speaker
um I think the initial part of that, initial part of my career, I was in category management. So what does a category manager do? Like, I'm just curious about the role of a category manager. Let's say, let's say you're a, camera my my first, my first job was to be a category manager for the books category, right? So when you're, when you're the books category manager, you,
01:00:41
Speaker
you become responsible for selling books on the platform. So that means what? You're ensuring that you have all the supply of books, working with all the publishers and the distributors, bringing every book in the world, out there, to be listed with the right catalog, with the right quality, put it out there, making sure you have the right stock, the right pricing, with the right merchandising and marketing to be able to then grow the business and take it up, right? I mean, as simple as it sounds, but you have to bring all of that and make it happen, right? So that's what a category manager does.
01:01:15
Speaker
and um I can see that DNA in how you built Scapia. Pitching together supply across everything, bringing multiple offerings to the platform, merchandising. yeah like All of this is what you've done at Scapia also, right? Yeah, yeah, yeah, yeah. yeah yeah Yeah, so because, look, I mean, your experience matters, right? to To be able to build a commerce platform, i I am leveraging a lot of my experience into doing some of this stuff.
01:01:41
Speaker
Yeah, then the second... Then the the second half of my time at Flipkart, I actually became the general manager of our marketplace ah business and product where I was responsible across categories to work with sellers to bring their products, list get them to price it right, help them ship and deliver the product to the customer. So...
01:02:05
Speaker
played a big role in shaping our marketplace for several years, which is a very enjoyable role. I loved it a lot because, you know, not dealing with only one category, one type of seller all over the country is is a wonderful role where I believe I played a a decent part in helping the company grow and the seller ecosystem grow.
01:02:23
Speaker
Then the last couple of years... You were leading the used, the refurbished platform, right? Two good products. ah That was ah during my marketplace. Towards the end, we started ah some used marketplace parts of it as well to be able to get the customer to buy refurbished products. we did We did launch some of that stuff.
01:02:44
Speaker
Unfortunately, we didn't go anywhere. PMF, yeah. I was curious about that. Why I didn't find Actually, did i did find PMF, but unfortunately, to get the trusted quality of supply at scale is not easy in the country.
01:02:56
Speaker
Yeah, because demand is there, but supply is very, very hard. It's still an unsolved problem in the country, by the way. If any entrepreneur has an interest in building it, you know, there's an there's an there's an open opportunity.
01:03:08
Speaker
um Then, yeah, last couple of years at Flipkart, I ran all of Flipkart's I would say consumer journey from brand marketing, acquiring the customer, getting them to ah shop across categories, what you list on the homepage, merchandising, marketing, running some of the biggest events like Big Billion Days,
01:03:29
Speaker
And also running the ads business. So monetizing the customer through the ads business. So ah yeah, so ran the entire, i would say marketing and growth part of it for a couple of years. Yeah.
01:03:40
Speaker
I think right before the pandemic, I had decided i wanted to leave and become an entrepreneur. I learned quite a bit, but I thought, if I didn't put it to use as an entrepreneur now, then I'm not doing justice to myself.
01:03:56
Speaker
So that's when I decided and I quit in November 2020 to a chart a company to help, I would say, SMEs and entrepreneurs around the globe to build their business and create their service offerings, collect payments from all their customers and provide services of the internet.
01:04:17
Speaker
ah Did that for less than a year, i would say. That sounds fairly vague. Yeah. I mean, that's like... That's like you're doing everything for your customer. It was actually, it was actually, think of it like Shopify for SMEs and entrepreneurs to be able to ah list their offerings, sell them, get their customer to pay for the offering on the internet, even scheduling. It's like a full suite of business tools for the SME to run their business. Yeah.
01:04:51
Speaker
and but Online commerce? I like to run it through online commerce or what? It was ah it is ah it is a software suite for them to be able to, let's say you're a doctor or let's say you're a um therapist, physiotherapist, right? And you have...
01:05:07
Speaker
you want to put your business out there. ah You want to be able to provide slots and calendaring services. You want to be able to collect payments. You want to be able to market yourself on social media.
01:05:19
Speaker
You want to file your taxes. So, but there's no software out there as an individual, as an SME to be able to run your business and do all of this stuff. So that's, that's the suite we're building.
01:05:30
Speaker
ah But, but like, look, we we raised money and what I realized quickly is that We raised about 9 million. Yeah. ah Yeah. So we did raise good money, but, and we had a good team, but we were, we're not getting the PMF and we were not going in the right direction. it was, we were competing in the world stage, ah trying to sell to customers in the US, sitting out of India, and because that's where the market largely is. In India, the market is still not as mature and as not as big.
01:06:02
Speaker
um But very quickly, we realized that my muscles are all B2C,
01:06:08
Speaker
ah So I wanted to play to my strengths and it is not very standard even now, but we took a very bold call to ah return the money, shut down the business and then i would say keep credibility and save investors money. See, look, at the end of it, money, people think it's just money at the end of it, but you know, it is somebody's hard-earned you know, investment, right? In the sense, investors themselves raise from other investors, those investors then raise it from some family somewhere. So, somebody is going to incur a loss if you actually don't deliver the returns, right? So, for me, i just wanted to do the right thing responsibly if I was not able to make it happen. If I knew that it was not going to happen, then how can I rally a team to make it happen, right? So, took ah took a break for three months.
01:07:04
Speaker
This… and Was it that you were trying to do too much in that? Like, it just sounds like trying to boil the ocean. um it that is Actually, that's a fair point. One was actually where we were trying to do too much and we could have been sharper.
01:07:21
Speaker
Two... Did we have, were we the right people to be able to deliver something like this? ah Or people from a software background or people who have those SaaS muscles or B2B muscles to
Strategic Development and Future Plans for Scapia
01:07:35
Speaker
be able to do it, right? So all of this needs to come together, right? And, you know, you can obviously learn and you can you can be successful even even if you're not, you don't have those skills.
01:07:46
Speaker
ah but but for me I want to ask you a little on the personal side. like You've had ah nine years of success after success at Flipkart and now you have first attempt and then you're returning money.
01:08:00
Speaker
ah yeah it it must have like really hit the ego and to taste failure after such a long string of unbroken successes and embarrassment, shame.
01:08:15
Speaker
shame you need to have ego to have, for it to hit you first. now So, but, but no then on ands no you know unless and and a serious note, it is quite grounding.
01:08:28
Speaker
It is quite, uh, humbling. Uh, to come from a pedestal of having tasted success as a, you know, senior vice president on a platform like Flipkart. And then after that saying, you know what, I'm setting down my company and I'm returning money. Some some of the things that you mentioned earlier,
01:08:52
Speaker
are are some of the reasons why people don't do it. In the sense, I don't know how people will think of me. You know, oh the shame of it just sounds like, yeah, like, you know, how are people going to perceive me? How are people going to think about me? Like, am I going to be considered a failure? Is anybody going to fund me?
01:09:09
Speaker
But you know what? These are exactly the reasons why investors will back you again. Because you decided to do the right thing. Because you decided to take the right call. Because when you're running a business, you have to be very objective in some of these decisions, right? So tomorrow, they trust you with money even more.
01:09:27
Speaker
So when I restarted and then I started Scapia, a I went back to my previous investors first as an informal right of refusal first. i i then They were the ones who backed me previously. So I didn't go to other investors first.
01:09:44
Speaker
And they all decided to back me. Right. ah and in fact At the idea stage or you already had a bank tie up and all that in place? but did you It was still idea stage. so So actually I did it slightly differently. The first six months I bootstrapped it. I didn't want to raise money until I got personally more and more confidence.
01:10:05
Speaker
So I was paying employees out of my own a pocket and it was getting bigger and bigger. Then I realized at some point I think I need more money than just using my personal wealth.
01:10:17
Speaker
I had not made that much money. How did you be able to fund stitch a bank partnership bootstrapped? I mean, like, I'm assuming banks would want that comfort that you are dead.
01:10:28
Speaker
you're You're right. look Look, some of my credibility in the past helped for the banks to get some confidence that, you know, I'm not like running a alone on some of this stuff. ah But yeah, I did realize that we needed money to be able to give banks more confidence. And at that time, I did pull the trigger. But but banks did not explicitly ask for it.
01:10:49
Speaker
But they were... going to ask for some of that in the coming months. And I i preempted some of that knowing that it's going to come my way. ah But you need to have a strong balance sheet. You're right. Yeah. Without a strong balance sheet, people will be afraid of partnering with you. So... ah What did you do with those nine months? You said like nine, ah six months, you both travel. what Did you...
01:11:12
Speaker
like start selling credit cards through the bank? but no what No, no, no, no, no. There was no credit card. We took, we took one and half years to build the card and actually sell it. So the first, ah look, we spent a lot of time in the first two, three months, just doing user research, talking to customers,
01:11:30
Speaker
ah hiring the right people, bringing them on board, stitching together the partnerships, building the product. I mean, it takes a lot of time and effort and investment. Like, you know, you want to start a factory. You can't say, I'll start selling this in the factory from day one. You have to build the factory. You have to build the bring the people. You have to build the raw materials. You have to start figuring out the distribution, the marketing. How should your brand be? How are you going to sell it?
01:11:57
Speaker
All of this takes time and effort. And actually, many entrepreneurs these days feel it's very easy. Let me just start putting out a product and within one month, let me start selling. That's the worst way to build a company, I believe. do You have to... you have to think through things, you have to think about what will succeed, what will not succeed, do some research, do some little bit of trial and error in a small way, of figuring out what will work, what will not. And then when you're ready, you go out to the bank and then like just scream loudly, right? So,
01:12:25
Speaker
The first one and half years we just built. In that one and a half years, what was the sequence? Like, did you build sales or like marketing side first or did you build rewards or did you build know the travel tech?
01:12:39
Speaker
What was the sequence? We had two teams set up. The first one team always was working on building the travel side. One team was working on building the card side.
01:12:50
Speaker
You knew travel right from ah day zero. Right from day zero. The travel focused card. this was okay I didn't start the company until I had a good idea which I thought would succeed. You saw that as a white space that there is no travel focused card.
01:13:07
Speaker
India needs a travel. Yeah, but we kept refining it with research. Like, that's a very broad statement to say India needs a car to travel rewards, right? But what exactly goes in? What rewards? How are you going to construct it? how are you going to build it? What is the exact numbers in terms of how much reward? What are you going to charge for it? All this stuff is a lot of detail, right? So,
01:13:28
Speaker
Like one team was just focusing on building travel. Even that, i realized I wanted to have two categories to start with. So instead of just launching with flights or something, wanted a little bit of choice. So we built both flights and hotels from day one. And in fact, in 12 months, first we started testing flights with 500 customers.
01:13:46
Speaker
Without a card, just book flights with us and just give us confidence. And we'll keep refining the product. Then three months after that, we put out hotels. That was the 15th month. We put out hotels and we got customers to test out our hotels.
01:14:00
Speaker
By the eighteenth month, We got our card live with the bank because getting a product live with the bank, there's lot of compliance, regulation, everything you need to do to make sure that the card works. It has that work with Visa and then the network to make sure that all the merchants around the globe accept it. So, in fact, the first test card we put out in March 23 and then the public launch happened in June 23. So, then we put out the product with two categories and the card with certain set of benefits and that's when we started. So ah there's ah there's a long journey to lot of this building.
01:14:39
Speaker
yeah yeah When did you launch the card? and June 23. June 23. june twenty three And how many cards in circulation today? we We don't disclose that, but you know like we we we we have we have ah several lakhs of customers in in in the country.
01:14:59
Speaker
And look, we are quite confident that in the next ah several years, we'll have several millions of customers. And I think are're growing at a rapid pace. And I think the love that the customers have for our product and the pull that we have,
01:15:14
Speaker
we also are getting multiple bank partners coming in and we'll be announcing them in the coming months. We are expanding the number of categories and, you know, India iss a very large market and it's quite under penetrated when it comes to the credit cards. So there's lot of tailwind there.
01:15:31
Speaker
There's also a lot of under penetration in travel. There's a lot of tailwind there and travel as well. So both coming together. Yeah, yeah I'm quite confident that they'll give us a lot of good growth for us in the coming years. yeah You know, isn't card like a, it's like a 70, 80 year old product, right? I think Visa must be. Yeah, yeah, so yeah. I mean, why do you, I feel like cards are like landlines, to be honest, like, you know, compared to UPI and, you know, these more modern payment rails.
01:16:11
Speaker
And like, India skipped the landline generation and straight away went to mobile. yeah So don't you see that as a risk that India will skip the card? We are not just a physical card. We're also a digital card, right? We've also created a rupee variant where that can be used over the UPI network.
01:16:30
Speaker
So we have we have created an offering where the customer can just scan using UPI, but they don't have to pay through debit, but it goes onto their rupee card.
01:16:41
Speaker
Then they are able to see the statement online on the phone and then be able to pay the bill. Those who want the physical card have it in their wallet. But, you know, the full digital variant where it's working or UPI and all of the machines and all the stuff is also all there.
01:16:55
Speaker
So we are not sitting idle and living only in the past. We are adapting and actually innovating the future where, ah like you said, you know, you...
01:17:09
Speaker
the form of the card will keep changing, but the essence of the payment instrument will still remain. And, you know, how you adapt to that will determine how sustainable you are as a company and how attractive you are as a company for the customer. so ah So, the ah card is a notional word. it may not It's not just a physical card, right?
01:17:32
Speaker
You have to think of a card as a payment instrument. Yeah. Tomorrow that might evolve into a simple credit line on UPI. But that's what will be the card of the future.
01:17:44
Speaker
yeah Are you planning a UPI play? Like having the proper UPI app? Yeah, we are going to be like ah you are going to be live in a month or two with our own UPI as well.
01:17:57
Speaker
But this is only open to Scapia cardholders. Like it's closed ecosystem. Right now it's a closed ecosystem. So, but yeah at some point, you know, we might open some other stuff, but not in the immediate future.
01:18:08
Speaker
Yeah. Okay. You had mentioned earlier that you'll share the numbers when you go public. So is that the end goal to go public? No, that's not the end goal. Those are all again, milestones, right? I mean, look, the the company...
01:18:22
Speaker
and the brand hopefully will be running in the country for several centuries around the globe maybe hopefully and expand and you know IPO is not an end goal IPO is just a milestone it's an important milestone it's a good milestone but You know, those ah those will all happen. And we are too early also to be thinking about IPO and all this stuff. So that will happen at some point.
01:18:44
Speaker
Yeah.
Leadership and Organizational Culture
01:18:45
Speaker
Yeah. But those are all milestones. Those are all, again, you have year in mind, like by which year you want to go public? No, no, no, no. Too early to be thinking about all this stuff.
01:18:55
Speaker
Yeah. Yeah. Too early. I mean, ah very, very early. We have just raised a series We are growing. And ah yeah, at the right time, we will do all of that. Yeah. I want to end with understanding a bit about how you manage people, how you built the org. And, you know, there I'm sure there must have been influences from Flipkart in terms of how the org is structured, built, how people are managed, how you hire, how you select people. Help me yeah understand a bit of your people philosophy.
01:19:31
Speaker
Look, one of the most important things that I think about when it comes to people is authenticity as to how authentic are you with them on what the company is about, what the company's vision and aspirations are, who you are as a leader, how authentic are you, what you plan to do for them, right? Uh,
01:19:59
Speaker
That is one very important dimension to how I think about leadership and people. Second thing is, I personally believe that if people are learning, they'll be happy.
01:20:15
Speaker
Right? um I've always believed that with when a company is growing, it's scaling. With scale comes newer problems and newer problems gives know newer challenges and newer challenges your always gives you newer learning as you're trying to solve them, right?
01:20:37
Speaker
ah So are you creating the right learning atmosphere in the company to be able to challenge individuals and push them beyond their comfort zone zone so that they are having a good time solving those and feeling satisfied and contributing? And it might be...
01:20:57
Speaker
functional learning, I might be a better finance manager and I'm learning a lot or I might be learning better as a manager, managing more people or I might be better, might be becoming better going outside of my domain and learning something new which have not learned. So it could be any form of learning but some of them actually come to learn how to be entrepreneurs like that like how I was in Flipkart, right? so you know, different people, different learning needs but primarily,
01:21:26
Speaker
if you're able to build a good culture where people are having fun, being authentic, learning a lot, everything else will fall into place. I mean, I'm i'm making it quite simple, but it is, uh, sometimes some of these simple things actually yield the best results.
01:21:44
Speaker
Um, then you build a team around it, right? You know, obviously there's a certain business, right? So, I'm in the business of co-branded credit cards, but I'm also in the business of travel. So you then you bring in experts on each of these.
01:21:57
Speaker
Then you bring in HR experts. You bring in brand marketing experts. Because you're a consumer brand, you want to be able to bring marketers and talk. You need, obviously, finance function for any business to work very, very well. right Then you need people in HR for talent acquisition, for talent development. right So to be able to think about rewards and benefits. And you need engineers to build the product. You need designers to be able to bring all of this stuff. So you need to think through...
01:22:23
Speaker
structurally and I'll give a lot of credit to Flipkart and my time there to be able to think through because I also run various functions as to what all does the company need? What functions do I need? Who do I need for each of these that to be able to bring those people in and then empower them?
01:22:45
Speaker
Look, I think most people know what they need to do. Okay.
01:22:51
Speaker
If you are able to, as a company, give them the time, resources, and the freedom. And from time to time, they may need some strategic direction. They may need some bouncing off on what they're trying to do.
01:23:03
Speaker
ah And then give them some of those guardrails that will help them. right i mean Obviously, everybody will not be empowered to take a decision at every level, right? i mean, somebody may be empowered only to take a decision up to a crore, but somebody above may be able to take a decision up to 10 crore. Somebody above may be able take a decision about 100 crore. So, if they know what is their freedom and then what are their dimensions into which they to operate, but just empower them.
01:23:29
Speaker
They will build, they will grow, they will have fun, ah and they will learn, they will and will they will they will do right by others. If you do right by them, they will do right by others as well. And then things will grow and and everything everything will fall into place. yeah Do you hire for functional expertise or learning agility?
01:23:53
Speaker
Both.
01:23:56
Speaker
Both. You can't can't claim to be an expert unless, just nobody is an expert. You have continuously learn in life. So I look for agility all the time.
01:24:08
Speaker
I look for learnability and intent actually more than anything else. And depending on the seniority and the position, how much of expertise we look for also matters. Sometimes when somebody very, very young, the expertise is less important. It's the ability to learn, which is a lot more important.
01:24:26
Speaker
But when you are coming into a role with a lot of responsibility, sometimes... you need to be able to tell others or teach others in terms of what there's, you need to come with certain amount of expertise. So it comes down to the individuals, but you, we need to look for both. Yeah.
01:24:44
Speaker
Yeah. Awesome. Thank you so much for your time. and and It was a real pleasure. No, no, thanks. actually a Lovely, lovely talking to you. Thanks for all the insightful questions. And, uh, uh, is quite an enjoyable conversation. Thanks for having me