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Making Mobility Accessible | Srinivas Kantheti @ Bike Bazaar
421 Plays2 years ago
In tier 2, 3, and 4 cities, buying a used bike is a hassle. The problem of financing exists. Bike Bazaar is chasing this opportunity by building a full stack solution that not just focuses on financing but builds solutions around retail and quality. This conversation is a must-listen for anyone wanting to understand the evolution of the Indian two-wheeler market and to know the upcoming opportunities in this space.
Know about:-
- Learnings at Bajaj Auto
- 3 reasons for selecting the two-wheeler category
- Penetrating the rural markets
- Need for a good distribution network
Recommended
Transcript
Introduction and Background
00:00:00
Speaker
Hi, I'm Srinivas Kanteiti, the founder and CEO of VNC and My Private Limited, also a brand named as White Bazaar. Very happy to be here to be with you people.
Indian Two-Wheeler Market Overview
00:00:21
Speaker
The Indian two-wheeler market is really a shining example of how India has progressed and evolved. In the pre-liberalization era, the brands that we all knew of with the two-wheeler space were mostly Japanese brands like Honda, Suzuki, Kawasaki, Yamaha. But really today, the Indian brands completely dominate the market and one of the most admirable Indian brands is
Bajaj Auto Transformation and Learnings
00:00:43
Speaker
Pajaj Auto.
00:00:43
Speaker
Srinivas joined Pajaj Auto at the stage where it was transforming from being known as the maker of JTAC to being known as the maker of high performance bites like the pulsar or the KTM. In fact, the pulsar was lost within a year of Srinivas' earnings. Over the next decade and a half, Srinivas saw up close and personal that amazing transformational scale-up journey of Pajaj Auto and we talk a lot about his learnings from that journey.
00:01:07
Speaker
By the time Srinivas finished 15 years at Bajaj, he decided to do something of his own and he stuck to what he knew best, the two-wheeler market. But this time, he decided to approach it from the lens of financing as a way of improving access to two-wheelers. Now, you may think that financing is really a done and dusted market. I mean, it's so easy to get financing when you walk into a showroom. But really,
00:01:28
Speaker
If you go into tier 3, tier 4 cities, if you're trying to buy a used bike, then the problem of financing still exists. And this is really a massive opportunity that Sri Nivasa's startup, Pike Bazaar slash Will ZMI is chasing. And the way they are chasing it is by really using a full-stack approach and not just looking at simple financing, but then also building solutions around retail, around quality check, around helping customers feel more assured when they buy a used-to-biller.
Introduction to the Founder Thesis Podcast
00:01:57
Speaker
And the proof of the hard work they've done is in the fact that they've raised more than $50 billion till date with the most recent drowning of about $20 billion. This conversation is a must listen for anyone who really wants to understand the evolution of the two wheeler market in India and some of the up and coming opportunities in this space. You're listening to the founder thesis podcast and I'm your host Akshay Dutt.
Early Career and Learnings
00:02:29
Speaker
I actually joined the Tata's, a company called Tata Electric, where I was very keen to work on their new 500 megawatt power station, which had come up at Bombay. And so I was there for two days exactly when they transferred me to, I think, a five megawatt substation, somewhere, sorry, power station, somewhere in the remote corner of Maharashtra. And after two days, I quit the job and I just walked out.
00:02:56
Speaker
And this is not for me. I quit my first job in four days. And when I went to my interview for the second job, that's when the HR manager said, how can you quit a job in four days? And what's the quality that you would be here with us? And this was a multinational Siemens. And so I told him, I said, look, I stay for four days. That means you can take care for granted that I'll be here for a long term. So
00:03:21
Speaker
I think that answer really helped me. I got the job and I worked there for 12 years, 12 solid years with Siemens. I did all kinds of things, mainly in the, I was in the front end of the business. So I was a product manager, the link between sales and factory. So it was a technical, commercial job selling switch gear, switchboards, motors.
00:03:40
Speaker
from the head office, was transferred to Germany for about two years, so worked there in Germany at Erlangen. And Germany was very different during those days. You could not get along there without knowing the language. So I learned the language and I was pretty fluent in German and did well there. Came back and then worked for the RAN. Siemens sent me to IAM Ahmedabad as they have this six month program for working executives.
00:04:03
Speaker
so it's a full-time six-month program and I think that exposure was very good because it opened up a whole lot of new world for me which is just beyond hardcore electrical engineering and what you're doing and when I came back somehow I started feeling that I need to spread my wings I need to try something else and also the family was growing and I was looking for a little more money I had two kids by that time
Entrepreneurial Insights from ABC Consultants
00:04:26
Speaker
And that's when I went to a headhunting company and asking for a job and instead of them finding a job for me, they actually made me an offer. And so I joined the headhunting company as a headhunter without knowing anything of ABC consultants. Yeah, this is ABC consultants. So Dr. Agarwal, it's pretty legendary.
00:04:47
Speaker
And it's a very strange kind of a company we see consented and in the sense that, 90% of people working in ABC consultants were engineers and they would never hire a single HR guy actually in the company. There was a hardcore, no, I don't take a equipment company.
00:05:02
Speaker
They actually wanted go-in expertise. They wanted people who had worked in the industry, people who had done actual sales, marketing, production. So we had all these kinds of people. And I think the background also is that they used to run industrial industry consulting earlier, but they mainly became a head hunting company.
00:05:20
Speaker
So this is where actually I would say that two things happened actually there, I think, or three things. The first is that it was a job wherein I was independently responsible for my branch. And if in the end of the month, I did not make enough money, I would not have money to pay salaries. But of course, it was not that bad. I could always follow the head office and they would send money for the salaries. But that was a shame, actually. You don't do that. So it really made you an entrepreneur.
00:05:45
Speaker
that you're running your own show and almost whatever money you made, 15% of the money was, no, I think 25% of the money was yours. And obviously to be distributed among your colleagues, team, and how your distribute was left to you. And so there was very good management techniques which people evolved over time. I would say that was the first thing. The second learning that I got, of course, was that various industries, it was from IT to engineering to
00:06:12
Speaker
FMCG, exposed to various industries, exposed to various, various functions. And they were interviewing these people before you put them up for the client. So you learn a lot. Okay. I think that came out very fast. And the third, of course, was that at least I got to meet a lot of entrepreneurs because as a company, when we would go, we would actually try to meet the CEO of, of course, the HR person was also important, but we'd also write to meet the hiring manager, the CEO.
00:06:39
Speaker
And that's when you get a lot of exposure at a very young age to these people actually. And how they think and how they act. So these are the things which I really learned there.
Career Shift to Bajaj Auto and Roles
00:06:50
Speaker
I just had one question. So like consulting companies like say, EY, KPMG, they have like this whole
00:06:57
Speaker
partner track and the people working in it also become equity owners after a certain point of time. Was ABC like that, like the global consulting companies? Yeah, I wouldn't say exactly like that, but it had something really much better in fact. And one is that you were straight away a part of the profit share of what you are making. So there was straight away coming to you because it's a private limited company.
00:07:22
Speaker
Okay. And when you do when, you know, as a head hunter and you really make a good amount of money, a decent amount of money you make. And the second is that I joined them and within three years I became a director on board. So I got promoted thrice and then became the director on board. So.
00:07:37
Speaker
which is pretty good when you're a director on board, you actually then your profit shares also go up significantly because you are then controlling a much, much bigger span of people. So I would say that it was a great experience, but I really was not allowed to be a head hunter all my life in the sense that I was still missing the big company, the big thing, the big excitement of big company.
00:08:00
Speaker
And I used to get offers from almost a lot of clients whom I was consulting with. So that was a very normal kind of a thing which would happen. And so one of the days I made a mistake, I had attended one of the most, what you call, important guys from Bajaj.org actually. And so the process of adapting is pretty painful in the sense there's a three month, you have to hand over for three months so that the guy is still very much interested. He's still going to join your customer, your client and all that. You owe it to a client and all that.
00:08:27
Speaker
And many times their dropouts happen within the three months period. It can be quite frustrating many times. And in this case, actually the dropout did happen. So after a month and a half or so, after extensive handholding, et cetera, then he was held back. And he was held back by none other than Rajiv Vajaj, who at that time was the vice president of the company. The son of Rahul Vajaj, but still not taken all of the MD, et cetera.
00:08:54
Speaker
He grew up the ranks, so he's a fantastic guy. College of Engineering, Pune, gold medalist, comes from that background, then goes to Warwick, works in the shop floor, works on R&D, and comes up from the bottom of the unit to an extent. So he held them back, and then he wanted to know who's his head and who did this.
00:09:12
Speaker
And so this guy called me up and said, look, this guy wants to meet you, but I have not told him. I said, I have no problem. I always like to meet people. So let me go and meet him. So I met him and somehow we clicked off well. And then he started giving me assignments and which I was doing. And that's when I think at some stage he asked me that, are you going to do this in all your life? Or do you want to do something bigger? And do you want to be more ambitious? And that's when he offered me a job as a human resources head at Bajaj Auto.
00:09:39
Speaker
At the age of 39, I go there as the head of human resources, never done human resources in my life. In a mechanical engineering auto company, I knew a lot about auto companies with a lot of them are flights, but I'm an electrical engineer, not mechanical. Okay. And so it was a small team, which Rajiv had put together and I became a part of that team. And so when the rest is history, I worked there for 15 years. And then before I left, I was the president of the auto finance business and then the president of the motorcycle business.
00:10:07
Speaker
And I would say that a lot of my maturation, a lot of my learning is actually from what I did at Bajaj and what I learned at Bajaj. The kind of opportunities Bajaj had to give me was fantastic. I don't think any HR guy would have got that kind of jobs. When I was running HR, I was doing assignments on marketing, sales, I was doing all kinds of things actually. So somebody used to ask me, are you really a HR guy? I mean, what are you doing? I'm not actually. So it was a great, great 15 years. I can talk about it a little more detail. And this way of the learning is actually okay.
00:10:35
Speaker
So, there are two questions I have. One is, of course, what were those learnings? But the second is, the finance part of Bajaj is in a different group, right? Like Bajaj also had a finance division in-house, is it? So, a little complex in the sense that you're right. The finance division is the Bajaj Fits part of it.
00:10:53
Speaker
When I joined in the year 2000, there were only two companies. There was Bajaj Auto and there was Bajaj Auto Finance. And I was there during the process where there was a holding company made and Bajaj Fin Cerv was separated out and Bajaj Auto Finance went under Bajaj Fin Cerv. Two insurance companies got opened up on that. So in fact, for a long time, I was helping out on the HR side for even Sajeev. And because Sajeev was there, Sajeev Bajaj was there in the Bajaj Auto and he knew me very well and I was working along with him. He used to handle exports earlier and all that.
00:11:22
Speaker
So I did all that. In fact, I was involved in the hiring of Rajiv Jay. So when at some stage, it was decided that the auto finance part of the business, which is auto finance, which is the capital finance, needed a separate way to hire those people, a separate person to hire.
00:11:37
Speaker
And I created that structure that though it will be in the residing in the finser, but there will be a separate set of teams which will be handling it. And they will work very closely with the Bajaj Auto team because it's a captive finance team. There will be four located together, but ensuring that all the profitability is maintained and it goes there.
00:11:56
Speaker
So it was a bit of a complex kind of a thing which was drafted and then they were looking at somebody to head it. And that's when I told Rajiv, I said that I had enough of it and now I'm going there.
Organizational Change and Brand Differentiation
00:12:05
Speaker
I literally almost forced him to put me there. And so that's how I went to the auto finance part of the business and ran it for four years actually.
00:12:13
Speaker
and a very successful four years. That's when I got promoted to president. And then when Sridhar who used to head our motorcycle business list, Rajiv brought me back to Bajaj Auto saying that now you now head the motorcycle business. So that's how I was very lucky to handle three critical functions. And even in fact, four, there was also the pro-biking part, which I handled for some time, which now finally has become KTM. Okay. We set up company owned stores across India. So about 30 of them at that time.
00:12:40
Speaker
and they have now become maki showrooms for KTM now. Okay. This was when Pulsar was launched and they wanted to work. Exactly. So a few years after the Pulsar was launched, Pulsar was launched in 2000. The year I joined, Chakant plant was also launched at that time. And I think after two, three years after that, we thought about doing this go biking and saying that we also had the Avenger or it used to be called as eliminated during those days.
00:13:05
Speaker
So we had only two products. The Pulsar 150 would still be sold out of all showrooms, but the Pulsar 180 would sell out of the providing showrooms and eliminate them. And slowly, of course, products were banned. The Pulsar 180 was the first bike I bought once I started earning a salary. That was the first purchase I did with my own money. So I bought memories of that.
00:13:28
Speaker
Yeah. And actually, the Pulsar 180 was always bought by people who really knew about bike heating, actually. Because otherwise, it looked exactly the same as Pulsar 150. There was no difference at all. But it really packed the womb. Yeah. It was definitely for enthusiasts. Yeah. Absolutely. Absolutely.
00:13:47
Speaker
If you could encapsulate the things you learned there, it could be in terms of learning about the business leaders or learning about building or running large organizations.
00:14:01
Speaker
Yeah, I would say that it was a huge organization. It was very big. When I joined 17,500 people, I was coming from an organization which had a total of 120 people or 150 people. So here, suddenly, 17,500 people, its own hierarchies and all that.
00:14:18
Speaker
Also, the fact that Mr. Raul Bajaj was still very much active in the business. He was the managing director of business. And so you were exposed to him and especially HR, certain decisions, whether when you're hiring certain level of people and above, he would meet them if you would interview them.
00:14:33
Speaker
every year your appraisals every year your etc finally had to be signed up by him so it was like a very very i would say now all the complexities of a large business but one of those things that i learned and i not talk too much about auto and all that of course i learned a lot about auto i learned about this and all that
00:14:49
Speaker
But I think one of the things of course is the fact that organizations evolve over the Europe type. And this evolving or the changing of the organization, when it happens, there is resistance of course. But the best way to actually make the change happen is to be very fast and firm about it.
00:15:07
Speaker
rather than drag it a lot. Okay. So just to give you an example. So when I joined, we were 17,500 people. In four years time, I brought down the number to 6,000 people. Okay. Now, so every year, luckily Bajaj also hired was financially pretty good. He's still financially very good. So we had money to actually do the VRSS, so downsize people because the organization, my downside was because of modernization. Like you didn't need so many people because of modernization.
00:15:35
Speaker
No, I would say it was because of a mindset change or a complete mindset change which was happening within the organizations, saying that Bajaj Auto was essentially a manufacturing-led company. Everything revolved around manufacturing. So if you look at during those days, we had huge machines which were not flexible, which were machines which can do the same component under type
00:16:00
Speaker
That model goes away, those machines can take a lot of time to re-tool or whatever it is. We had everything in-house, we had heat treatment in-house, we had a press shop in-house. The mindset was changing from being a manufacturing-oriented company to becoming more and more a marketing and R&D-oriented company. The skill sets were becoming very different than what you wanted.
00:16:22
Speaker
Okay. And also how to variableize your fast, because at the end of the day, a business is risky. So if you are able to, for example, do you really need to run a pressure? Okay. Or do you really need to? So what was done was 10 key processes were identified, saying that these 10 key processes, we will never subcontract. We'll do it ourselves.
00:16:42
Speaker
Everything around that had to be then subcontracted out. And I think during those times, we had something like about 800 vendors or something. They were brought down to 125 or 155. But okay, so theorizing the vendors and ensuring that you have a lesser number, focus on quality, focus on this. Because the market was changing, the entire condition had changed the market.
00:17:01
Speaker
moving away from scooters to bikes. So I think first, thinking of the strategy and second is that single-mindedly driving it without getting distracted is what I learned from Bajaj Auto. I learned from Rajiv and he had all these fantastic guys like Pradeep Srivastava and Joe. Joe was the youngest R&D head at Bajaj. He's the guy who did the pulses and all those things. So it was a very, very vibrant young team on one hand.
00:17:26
Speaker
trying to make all these changes and then of course there was the other generation which was there so the shift is never easy and as they say you need a lot of conviction in doing it and especially when you are also dealing with a very very aware person like Raul Bajaj would question everything and you cannot get away with just saying that I'm doing what I want to do.
00:17:45
Speaker
You'll have to give all the logics, et cetera, and all that. So I think that was a fantastic journey. So this is one part of it is that change happens and you better be a part of the chain and you do it fast. The second learning for me was that the entire business about not being me too and about brand. And this is what is helping in me in my current business. Is that creating a differentiation. I mean, during those days, you remember when I was working for APC and all that, everybody wanted to put up a power plant.
00:18:11
Speaker
Everybody wanted to put up a cement plant. I did some work for Raymond's, for example, the organization. They were doing everything. They had a cement plant, they had a steel plant, they had everything. They had an airline, they had a hospital, they had a school. Of course, they were doing textiles and all that. They had a condo business.
00:18:30
Speaker
All kinds of things. So happening and when you come to a company like Bajaj or with Rajeev and clear focus saying that, no, I'm a motorcycling guy. I'm going to do only motorcycles. I'm not going to do anything else. I'm going to create a brand. I'm going to be differentiated there. And when the whole world was making 160 bytes, I mean, here the gumption to go and do a 150 and a 180. Okay. Also.
00:18:49
Speaker
And I was there during those famous meeting, which he keeps on voting, wherein Mackenzie had actually told us, why are you dancing around the market by bringing in a 150, 180 CC product and how much you're going to sell really? Okay. And you can't even make 100 CC by, so how are you doing this kind of a thing? And their suggestion was that we should focus on the 100 CC rather than trying to do this. So that's where the learning came from. The whole world is now also talking about how you need to focus, how you need to differentiate.
00:19:15
Speaker
And also the fact that office means sacrifice, that means you can't do certain things. So in my company, people keep on asking me that they are, they say that in finance business, we are essentially in the finance business today. We are building also a marketplace, but the finance business, they keep on saying that there's a concentration risk. Why only two-wheelers? Why you're not looking at, at least do cars, at least do more, at least do trucks, at least do three-wheelers. Just add a few more wheels. I have to keep on telling them that, no, no, no, our expertise is too, and we need to focus on two, and that's what we want to do, actually.
00:19:44
Speaker
Yeah, it's very hard for an entrepreneur to say, no, that's a rare skill. Yes, it is. And I keep on getting tempted. I would say that it's not as if the temptations don't come, but then I keep on going back to my old learnings.
00:20:00
Speaker
Even four or five days back, there was this company which was available in some way, which was doing on truck financing and said, we don't know anything about trucks and then let's not get into it. Everything is different. Just because it has four wheels, it doesn't mean it's two motorcycles put together. The whole world is different.
00:20:15
Speaker
And that's where I find the financial services industry a little funny. Because there, its opposite is true. People don't like concentration risks. So they feel that if you're diversified across segments, if something happens to you, then you know. But then you end up making very little money if you're not a specialist.
00:20:31
Speaker
So how did that move happen from being part of the leadership at Bajaj to being a founder? Yeah, I think it was, I had promised myself long back that at the age of 55, I would be done. Okay. And I was close to
Founding White Bazaar and Initial Challenges
00:20:45
Speaker
that. And it wasn't 2014, yes, 2014. When I went and told Rajiv that, look, I would like to now take a break, I would like to leave. And
00:20:53
Speaker
I would like to do something else altogether. So we had a long chat and he obviously was not very happy initially. But then Rajiv was very fair in his approach on this. And he said, okay, all the best. And when I went to meet the chairman, Mr. Raul Bajaj, he was a little more upset than me saying that, really, you ought to leave. So, and what are you going to do? And so I had certain thoughts in my mind. I started a consulting company and wherein I did a lot of work with
00:21:16
Speaker
companies like escorts. So I was part of their management committee to advise them in the transition from being a multi-product company to becoming more of... So they had the machine tools, they used to have this various other than tractors, they had small operations. So got them to sell a couple of them, got the merger happen, did the same thing in terms of manpower, variableized the fast, et cetera. So they can work very closely with them. Good trend even now.
00:21:45
Speaker
Okay, so I was doing that and that was when my other co-founder, Karuna Karan, who used to work along with me in auto finance and he continued to work in auto finance and he has almost his entire life he has spent in the tubular industry and both at the OE side and also finance side.
00:22:02
Speaker
And whatever I learned of finance, I learned from him actually. So I didn't know anything about finance at all. So all the learning came from him. So he came to me one day saying that he was quitting and he was joining a competition as CEO. And that's when I asked him, he said, same age as me. And he said, don't you think it's time that we do something ourselves? We are fast the stage of wanting a secure salary. Bajaj paid well. Bajaj really pays well. So we had money to take care of. At least our needs, if not luxuries. Children are getting settled.
00:22:28
Speaker
So he also liked that idea, and that's how we thought that we would start something on our own. And at that time, we were dabbling with the idea of doing microfinance with this. Microfinance was at that time a very hot subject, and some of our friends actually had become entrepreneurs, and they've done very well, actually. But then when we sat and we discussed, again, the first principles, going back to the first principles, we said that
00:22:48
Speaker
We don't know anything about microfinance. So let us actually look at two wheels. That's what we know. And that's how we started off. And I went back to Rajiv Bajaj. And I told him, look, you know what? I'm going to start a two-wheeler finance company. And so he asked me 10 questions as to what is my difference relationship? What is it that I can do which Bajaj finance cannot be? So I think I had answers to all those questions. We thought about it.
00:23:11
Speaker
What were those answers? If you can. So, for other times, I haven't talked about the industry a bit then. Okay. And let me do that. So, why did we select two-wheelers? Okay. And there are three main reasons for selecting it. The first reason I already told you that the fact that we know two-wheelers well, okay, so we know two-wheelers.
00:23:28
Speaker
And mostly everybody in the two-wheel industry was seeing. So that was a big advantage. But knowing is not enough, right? This is a business sector. The second was that India is the largest market in the world for two-wheelers. And it is by far the largest. And even today, the penetration levels are still much smaller as compared to countries like Indonesia or other countries, which are also large two-wheeler markets. China, for example, is a large two-wheeler market. So if you look at that penetration, they are about family-wise, about 120% penetration.
00:23:56
Speaker
India is still lower. Now it's 60% penetration. So still there's a lot of scope for penetration to increase in India. Okay. And the other fact is that as far as up to, I would say now up to 250, 300 CC bikes and you live in Japan. So you know this well. I think the Indians have now more or less reached the level at which a Japanese would have been there. And sometimes they started beating them also at cost.
00:24:18
Speaker
So if you are a Harley Davidson, say for example, you cannot survive in the world unless you have an Indian partner. I'm not talking about surviving in India. I'm saying you can't survive in the world. Because if you have to sell, look what happened to KTM. It was almost banked out. And then comes in Bajaj, ties up with Bajaj. Bajaj picks up stake in that. All the lower CC bikes, it makes a 35-40% cheaper price.
00:24:38
Speaker
Because on the cost is the design, it is not in manufacturing. I mean, you can take out certain parts out in manufacturing, of course you can. But how you design the product and how you do it itself. So when you have a twin kind of a strategy of a brand, similar engine going one in a KTM and one in going a Pulsar, but the KTM being as a brand priced 40-50% higher. Okay, you completely change the rules of the game. And this is what Bajaj did. So the reason I'm telling you this background is also that we believe that India has also started to become the R&D center of two-wheelers now.
00:25:06
Speaker
Okay, so Triumph has followed now and BMW has tied up with TBS and now Audi is not tying up with Hero. So you can see that happening basically.
Financing in Rural and Second-Hand Markets
00:25:15
Speaker
So we said two-wheelers is going to survive. It's going to be a great business. And as in when electrification happens, two-wheelers are the first ones to get electrified. So it's a great industry to be in. So this is the second reason about the industry. And the third final reason was that while there were competitors in the market out there, first, they were much lower than as compared to cars. For example, if you want a car too, you can answer
00:25:35
Speaker
You have almost every bank falling over you to finance it. You want it two-wheeler to be financed, you'll rarely see a bank falling over. You'll rarely see a bank of borrowed out SBI coming in, giving a two-wheeler loan. So the number of competition was low because of the small ticket, very challenging, very collection intensive. The second is, of course, is that there were a lot of open spaces where nobody was focusing on. And that's what we wanted to go to.
00:25:55
Speaker
So we didn't want us, just because we are from Bajaj, we didn't want to just pick up the phone and talk to all the Bajaj dealers and saying that, look, I am now in the tubular business. And of course they would invite us because they are our friends. But how can I compete with a Bajaj which has funds at 30% cheaper than me and has a huge history of the background with them and is a captive finance company.
00:26:13
Speaker
Okay, I can't complete it. So I have to choose my battles and that's what we did. Which idea did you see as underserved that you could make like establish yourself with? So when you look at the entire tubular industry, one of the things which struck us immediately and it was such an aha moment at that time. And I still remember, in fact, my co-founder has a date also written down somewhere. I don't remember the date. So we were sitting in the Pune club and we were having a beer and that's when we were discussing this and we said,
00:26:40
Speaker
Hey, hold on. I said that. I said, hey, hold on. There's nobody who finances second-hand two-wheelers in India. OK, that's a two-wheeler industry, right? Now, so the point is the moment you think two-wheeler, people think only about new two-wheelers. So that's the first mindset she shipped and said, second-hand two-wheelers. We said, yeah, that's now, of course, it has its own challenges. There's a very good reason why people are not barking to it. But the fact is that there was that market available there. It was the space which is there. And today, after five years, we are the largest financial of second-hand two-wheelers in India.
00:27:10
Speaker
Okay. And it's a highly profitable business. It's a business which can be done very nicely. And it is a business which has what's built around it because one of the big car startups, I'll not name it, car startups thought that doing bikes is like doing cars itself. And didn't realize that key of 40,000 rupee bike, if you want to go and do a 120 point check, which they claim they do the cars. Okay. You cannot send a man to do it then because you can't afford to do it because the cost structure will never let you do it actually.
00:27:38
Speaker
So you need to have a very good understanding of the two-wheel industry. You need to understand what to buy. You need to understand which to finance, et cetera, and all that. So that's where the board started building around it. And we were able to do at a much higher price. So that's where we started, actually, our journey. And that's one example. We have many such examples. So the second example, for example, is there's an entire almost 40% or 54% of the market today is in the semi-urban and rural towns of India.
00:28:04
Speaker
And as you start going to those towns, you see financing starting dropping down. The finance penetration itself overall is about 50%. Now again, finance is 50% penetration as far as finance penetration is about 80% or 90%. And you know that the tool of prices have been going up steadily in the last two, two and a half, three years. Now it's almost 30% higher than as compared to what it was two, three years back. So financing is becoming more and more important. And as you start going towards tier two, tier three towns and the smaller villages, the number of financials start dropping down drastically. And that's where then we saw open space
00:28:33
Speaker
wherein I wouldn't say there's zero competition there, but I would say there's very less competition wherein we could go and that's when we did a very interesting product at Bajaj which used to finance customers who didn't have bank accounts and so we over a period of time we refined that product and now it's a very successful product for Bajaj somehow many other financials tried to do it but they were not able to do it.
00:28:53
Speaker
How do you do that, like, for that thing without a bank account? See, it's no rocket science, but it's very difficult to execute. So I think execution is all about execution. And this is inspired from the fact that when I read the banker to the poor, there was one sentence which stuck in my mind. It's not as if the customer is not credit worthy. It is banks which are not customer worthy, actually. So just because he doesn't have a bank account, or nowadays he has a bank account, a lot of people have bank accounts, but they don't use the bank account for a lot of transactions.
00:29:21
Speaker
So it doesn't mean that he's not field worthy. Okay. And so first is that, that, that mindset change, say that he, I don't need a repayment instrument if I give you a loan. So today it is, it's unheard of where you give a loan without a repayment instrument because you take checks.
00:29:36
Speaker
During those days, you used to take checks, now you take a NAC mandate. You take a mandate every month, it goes to the bank and all the money comes out and all that. The idea is that if it bounces, you can take legal action against them. You can put Section 138 or cheating, etc. You can do all that kind of stuff. But when I go and ask people that how many Section 138s you are successful in the two-wheeler loan, the answer is zero, actually.
00:29:58
Speaker
So removing from your mind the mindset that I need a repayment instrument, so I don't take a repayment instrument, but I tell him that he has various ways to pay me. He can pay me through Google Pay, he can pay me through any of the digital payments, but more important, he can walk back to the dealership. And in many cases, it's actually not a dealer, but a sub-dealer from where he bought the bike and every month he can go and pay his installment there.
00:30:22
Speaker
Okay. And create a complete ecosystem around it. So there's a lot of tech involved in it. It's not just like that cash has to be handled. It has to be done properly. So all that has to be done. And so that was a model which became very successful at Bajaj. And we took the same model and replicated it and we started doing it for other companies.
00:30:39
Speaker
So we do it for hero, which is very big, especially in the north. So for hero, we have been quite successful in penetrating the hero market. We have been quite successful in looking at, now Honda, we're looking at that. So this is another example of going into a territory where the competition is lesser, where you have an expertise in some way, develop it.
00:30:57
Speaker
So I guess that has been my most important running at Bajaj. We have kept on saying no whenever anybody wants us to come to Bombay to do new vehicles or Bangalore to do new vehicles or whatever it is. What is it I can add value? I can't. There's no value I can add.
00:31:14
Speaker
If you like to hear stories of founders, then we have tons of great stories from entrepreneurs who have built billion dollar businesses. Just search for the founder thesis podcast on any audio streaming app like Spotify, Ghana, Apple Podcasts and subscribe to the show.
00:31:34
Speaker
So tell me about that zero to one journey. You had something in mind, but I have generally seen that the best-laid plans when they meet reality that, you know, things change and there is always a period of struggle and until you fix.
00:31:50
Speaker
some faulty assumptions and find that product market fit in the right way of doing things. So I'd love to hear about that journey. Yeah. Let me just before I answer that, just add that it's not just the zero to one, actually it's zero to five. It's happening every time. So I think every day our assumptions are getting questioned, rightly so, not questioned by anybody, but by the market and you are changing. As I said, the first moment for us was the second hand vehicles. Let's do it.
00:32:15
Speaker
In second-hand vehicles, actually, you see the entire industry of two-wheeler second-hand vehicles. It's actually run by mom-and-pop shops. People call them brokers, but that's not a good name to call them. They're not brokers. They're really invested in stock. So they are unorganized retail outlets. Let me put it this way. So you go to, say, for example, Hyderabad, and you go to this market, and there you will see about 150 of these smart dealers were selling. So it's a two-wheeler market, actually.
00:32:39
Speaker
You can buy, sell, you know. And these people have been doing it for generations. So that is the place where we wanted to get our customers from. That's the easy way of getting customers rather than going a direct route to the customer. How do I know somebody wants to buy a second and wait? So we go to that market. So this is how we did it. And so when we started doing this, and I still remember the first month of operation, we were supposed to do, I think the number we were supposed to do, we had started only Pune and we had started Bangalore.
00:33:08
Speaker
only two cities. And we said the first month, we'll do 100 weekends. How did you fund it? Did you get an NBFC license or were you tying up with NBFC? No, no. So what we did was right from the beginning, we said we build a book of our own, at least initially, because it takes time for people to understand this. And so we went for an NBFC license. So we bought an existing company.
00:33:33
Speaker
We got a transfer done. We changed all that. We also were looking at funding. And so again, it's one of those lucky moments when I asked somebody at EY whom I knew well, saying that, look, how do I do this? No, this is something which I had never done. At Bajaj, one thing I never learned is how to raise money because I was never in the finance department. We didn't need to raise money actually.
00:33:57
Speaker
And even when I was a lot of finance, the treasury was common. So Rajiv Jain's team was raising money. I just had to tell them, I need so much money and they would bring it in. So we said how to raise equity in debt, of course, is that so for equity. So I asked this guy and he actually put me up to the fund, VC fund in Bangalore for L.A.
00:34:17
Speaker
And I went there and met Sandeep and Jotsna, and I asked for an appointment. And one of the things about L.A.V.A. is that the first meeting in L.A.V.A. is always done by the decision makers, which is very unlike any other PE fund. In fact, I don't even understand how PE funds are able to do this, that they have the junior most guy talking to an entrepreneur who actually has gone through the journey quite a lot.
00:34:38
Speaker
And because you need to make a decision somewhere. So first we will meet. So I had a thing. I still remember I had my laptop. I had my entire business plans made everything ready. And I went there. So Sandeep told me, no, just shut your laptop. I don't want to see anything. Just tell me about something.
00:34:56
Speaker
And I think about 45 minutes or 50 minutes down the line said that we're very interested. Just get back to me with your detailed plots and we are very interested. And that's it. And I was going on holiday and said, I'll come back from the holiday and talk to you. So I came back from the holiday and we met my team. We had already created a team and they agreed to fund us. And we sat across the table, agreed a bit.
00:35:18
Speaker
And I agreed to it, and then I came out and said, I hope I've not got gypped. So then a friend of mine was in the PE business, and I told him, this is a valuation model. He said, no, you've got a good deal. So that's it. Now, the problem was that we had that funding, but we didn't have a
Building a Sustainable Business Model
00:35:31
Speaker
company. So we had to rush to all the company and all that. So anyway, the initial source of funding was equity. So we raised 23 cores as a first run, and I never funded it, actually. So when we started in this first run, we were supposed to sell about 100 odd vehicles.
00:35:48
Speaker
a finance hundred vehicles. And we financed a grand total of two vehicles in that month. Through the tie-ups with the dealers, the second-hand vehicle dealers. Okay. Yeah. We did all the tie-ups, we did everything. See, we had an app, et cetera, and all that, but we knew that these guys are not going to do any such thing, because first of all, financing itself was new to them. Second is that, so we would have a guy who would be hanging around the market, he had the app, he would put everything, and he would
00:36:11
Speaker
the credit and we would do the disbursements and all that. And remember, we have worked at a scale which was huge at Bajar Auto Finance. We're doing 10,000 odd crores so that only in auto finance business. And here, to think, to downsize your thinking and come back to that level is not very easy, but we were doing everything ourselves. So, and two vehicles we did.
00:36:32
Speaker
I said, shit, this is like really something is wrong. Was it because customers were not there or your approvals were not allowing you to, like you were not able to approve? No, the customers were not there at all. It's not as if our approvals because we were sitting waiting for the customers. I mean, it's not as if we rejected a lot of cases or something like that.
00:36:51
Speaker
So then a lot of funders started getting, saying that we used to disburse the money to the new unorganized retail outlet that broke up. So they would not like money to come into their account. They wanted cash. We said we can't do cash, businessmen. So all the reality started getting. And then that's how we started working along with them, working along with the chartered accountants, taking RCA, explaining to them,
00:37:15
Speaker
GSD had just come into that country. GSD was also evolving. So I think those were the fears. So the dealers, obviously the URLs were not obviously pumping for our product. And in India, you have to meet a person at least three times before he starts telling you what reality he has in his mind.
00:37:31
Speaker
They don't want to displace you. So they'd say, no, no, this is very good. But actually, they would not show it. So I think the inability to say no is ingrained in Indians. And we started learning a lot. So the first thing we also did was that we hired service engineers, because we are obviously financing a second-hand vehicle. So one of the most important things is that the quality of the vehicle, and secondly, also the valuation. How do you value the vehicle?
00:37:57
Speaker
So obviously, these people started going and they would value the vehicle and all that. But we also realized that in the long run, this cannot work. When you're going to scale up, when you have a huge number of vehicles, you cannot keep on sending your service to a battalion of service units to do it and all that. So also developing our own grid, evaluation grid, out of our experience. That grid was like an algorithm. Basically, you would input data points like color, model, make, and how many orders, and then it would throw up.
00:38:26
Speaker
the valuation, something like that. Yeah. So that's exactly what we thought we should do. But thank God we didn't do that because we realized very quickly that all that matters really is for the prices that what is that bike and what is the brand and what is the year and a reasonable amount of guarantee that the vehicle engine is in very proper condition. That's all matters. Nothing else matters.
00:38:51
Speaker
Okay. So it's all theoretical, the rest, especially because you are doing a vehicle which is costing like for what, 35, 40,000 rupees max. Okay. So that's the kind of thing. I know that an Activa has a higher resale price than some other scooter. Or I know that your splendor has this and then I know that a 2017 model will come on this price because it's at the end of the day, it's about that pricing actually is what it commands and ensure that the vehicle is not a lemon. Okay. That means basically I've seen that people go and buy.
00:39:20
Speaker
They know how to check the outs, they check the brakes, they check the battery, let's do all that. The only thing they are not able to check is the engine. So normally during the good old days, people used to take a mechanic along with them. So what we finally boil down for, keeping it simple and keeping it very narrow focus, is saying that I want to know whether the engine is good or not before I finance the vehicle.
00:39:41
Speaker
And so we developed for that actually a method. So we have a recording of the sound of the engine and the smoke. And based on that, we decide a go logo kind of thing. Now, over a period of time, we have now a huge database of these kinds of sounds and smoke. And we have now started putting that into some kind of AI-led kind of algorithm, because we also want to now start becoming more and more precise, which says that what is wrong with the engine?
00:40:10
Speaker
Is it a Tafet adjustment? Is it just as simple as that? Or is it something else? And how much it may cost to reach for Bishop tomorrow? Because we are also getting into the business of buying and selling our second-hand vehicles. So your person would record the engine audio on the mobile app? That was how you were doing it? Yeah. Initially, it was very crude that he would record it on mobile and send on WhatsApp. But today, we have a proper app. So he takes those photos and he takes the sound of the engine and takes the smoke.
00:40:38
Speaker
smoke like a video of this smoke. There's a video, the video of smoke. And since it's an app, we have been able to compress the file sizes quite a lot. So it comes in and we have about five or six service guys across India. So it goes to anybody of them and he just sees it and he approves it on. So we are now seeing what is approving and why he's approving it. And we are using that to start automating that. You can use machine learning to like. Yeah, exactly. Exactly. Exactly.
00:41:04
Speaker
See, one of the complications of machine learning, it's actually the data. You need labeled data, object-related data. So we have the data, so we're working on that. That's how we're looking at it really.
00:41:18
Speaker
How did you evolve the product to meet the dealer objections, like the GST concern, the cash concern? Did you change the product or that was just an education initiative that you had to undertake? No. So what we did was that in certain cases, we changed the product. In certain cases, we didn't change the product because they were fundamental to our business. For example, cash disbursement, we said, no, we'll not do that. Okay. There is no way in which we can do it. And I'm glad we didn't do it because today it's working perfectly. Nobody is talking about it now.
00:41:45
Speaker
Okay, so I think it was early fears and all that. Similarly, about GST etc and all that. But for example, we used to insist that every vehicle that we found should be insured by us. Now, there we have changed the product because insurance base, we said that it has to be comprehensively insured. Now, there are certain products where the product itself was passed to 25,000 rupees and our loan was 25,000. Maybe the product was 30,000, 32,000, 33,000.
00:42:08
Speaker
So I had a 25,000 rupee ticket size. For him, paying another 2,500 rupees as an insurance product became a problem. So we said, OK, then in these cases, lesser than a particular value, we just do the third party insurance. As it is, the bike has any problem and this guy will parrot himself or something.
00:42:26
Speaker
So, in some cases, we change the product. So, I think it's a learning and Karuna is very good at this. My co-founder again, he has the year to the ground. He understands the market very well and he's the one who keeps our company straight in terms of being very customer-focused.
00:42:41
Speaker
His favorite dialogue is that even when we do anything on tech, for example, he will ask the tech guy, are you doing it for yourself or are you doing it for the customer? How does it help the customer? If he doesn't have the customer, I don't want it. So I think that's where listening to them and understanding from them paid good dividends. And it was also a cultural issue with some of our sales guys because we had hired them from the two-wheeler industry and they were accustomed to going to dealers.
00:43:08
Speaker
And dealers are big guys. I mean, many of the dealers don't even sit in the dealership. They have a general manager who looks after it. So there's an air-conditioned cabin wherein you sit and you talk in a shop and then you then ask him to lift two, three loads. Then you come out. Whereas here, this guy is literally on the road. He's sitting there on the road. And our guys have to interact with him and sit with him and take tea with him. So I think that also took a bit of a time for them to get out of that.
00:43:36
Speaker
Because at the end of the day, that relationship matters a lot. And the people were scared that we might take away their business one day. So that was also another thing. I think when they started realizing that we are not here to take away their business, but their business will actually go. And almost everybody today says that we have about 550-odd URLs who are registered with us. Go to the URL and organize retail outlets. And all of them more or less say that the business is one of the 20-30%.
00:44:03
Speaker
after we started financing product for that. Yeah, that's basically the BNPL promise, right? Like if you start offering BNPL to your customers, your sales go up. Absolutely. So I think that's it. But as I said, the learning never stops. It is there.
00:44:19
Speaker
every day of the year. So the other thing that we understood, and it was so surprising when we found out that before we started the secondhand Google business, they are being very, very professional and coming from, so we did a market survey and we hired one of the best market survey companies. I don't think I would ever do that again. Sorry. Nothing against the market research companies. They play their part, they play their role, but it was too early for us to do that actually.
00:44:41
Speaker
So we wanted to give and get an assessment how big is the market and what it is and all that. And they did all that and it came out that the market is like for 100%. That means for every one new vehicle getting sold, one second-hand vehicle getting sold. Okay. Now, and I have seen this number being quoted left, right and center by a lot of people also, but after five years, let me tell you, it's nowhere near that. The market is less than 50% actually.
00:45:04
Speaker
And the car market is about 150%. But every one new car, 150, no wonder the second-hand car market is booming today. That's why there's so many unicorns in that space.
00:45:17
Speaker
Absolutely. Unicorns in this space. And as I said, the unicorn trying to do this space, they quickly realized that your Badami Chodo is broker. So you should go beyond eight or nine cities in India. Second hand, these ropers, URLs, or whatever you may call them, they don't even exist. So a lot of informal exchanges take place and all that. And people actually do not get good rates, so they don't sell. They just keep on adding the bike. Somebody in the family rides it. So for us, that opened up another stream of thought, saying that we can actually start
00:45:45
Speaker
another stream of business, which gets into actually into the smaller towns where we are already doing, I told you about the entire financing, the unbanked or the underbanked customers, we are doing new vehicles there. So we said that we could actually start buying and selling secondhand vehicles there and setting up a secondhand vehicle franchisee outlet. And we started doing this and today we have almost about 25, 30 of them across India. Next year we'll have 100 of them.
00:46:10
Speaker
And what we do is that now we already know how to value the bike. We already know how the quality of the bike we can assess. Now, as I said, we also know what we need to refurbish. We actually buy the vehicle, refurbish it, and sell it off to this franchisee. And we guarantee that there's a six-month warranty on the bike, et cetera, and all that, and give the customer a full experience of Asif is buying a new bike.
00:46:31
Speaker
Okay. Because he gets a guarantee, he gets a refurbished by hand. We do the entire paper transfer, get the paper transfer done and also ensure that we go financing.
Entering the Electric Vehicle Market
00:46:40
Speaker
People ask me that while you're a finance company, are you a marketplace? What are you? So I said, look, there are two ways in which a business can grow. One is that you go horizontal, which means that I'm financing two-wheelers. Let me start financing by three-wheelers, trucks, et cetera, and maybe tomorrow housing loans and become a generic NVC.
00:46:57
Speaker
Okay. All the other ways that I go deeper and I actually, I say that I will do everything around the two wheeler. And so, so I'm neither. I'm actually a two wheeler company. That's what I am. So I want to follow the two wheeler through its life cycle of 15 years. Okay. A 15 to 20 years is a life cycle of a two wheeler. It changes hands three or four times.
00:47:14
Speaker
So I want to be there when it changes hands. I want to finance it at that time. I want to re-service it at that time. I want to buy and sell it at that time. So I want to keep on hiding that value at that thing. And then suddenly it opens up horizons of doing things like leasing and things like that. And all those kinds of things start opening up. So this is the learning that I got from saying that by being differentiated, while you may be sacrificing on some fronts, on other fronts, you have actually a great advantage of going deeper and deeper into it.
00:47:43
Speaker
Now imagine a HDRC bank or somebody trying to buy and sell second-hand vehicles, forget financing second-hand vehicles. So these are my computations. So they will never get into that. And that's how it happened with electric vehicles also. We are one of the, I won't say the biggest, but we are one of the very, very leading what you call the financial of electric vehicles today. And I also know that the future of electric vehicles is going to depend on financing.
00:48:06
Speaker
And it is going to depend on the capability of the person to actually finance the battery rather than financing the vehicle itself. Because battery is the biggest cost component and it needs replacement in a couple of years, I think. Actually, so three year is the warranty that they are giving nowadays for the battery. But I've seen that if you ride a hundred kilometers a day, which a lot of delivery boys, whether it is 3G or Zomato, they do ride about 90 to a hundred kilometers a day, you need to charge twice and your life becomes half.
00:48:35
Speaker
18 months, you need to replace the battery. So we have done extensive work with the riders. See, one of the things that we like to do is rather than talking to the company, we like to talk to the person who's a rider, actually. And we've got riders to come to our offices from wherever we have offices. We've got all kinds of electric vehicles. We've made them ride all of them.
00:48:57
Speaker
and got a lot of feedback saying that what they like, what they don't like. This is light and this is not strong enough. I have to carry so many kilos and all that. And they're so good at the calculations that they're the only guys who actually have proven to me that, and maybe I hope I'm not entering the countries here, but let me say it is that at today's level, unless you're riding at least 80, 90 kilometers per day, the electric vehicle does not break even because of the battery replacement costs.
00:49:23
Speaker
Absolutely. And the fact that you still have a very, very good two-wheeler second-hand market. The IC engine market is not gone away anywhere. You are getting penalized on both sides. On one side, at the end of three years, you are able to make money, not make money, you are able to get a residual value for your IC engine vehicle. And on the other hand, you are able to know about this. So I think that's where we have started developing specialist products around this. I'm not saying electric vehicles are going to go away anywhere, they are going to become big.
00:49:51
Speaker
So we need to actually develop right business models around it. So we are doing all kinds of things. We are financing only the battery. We are renting the battery. We're doing all that kind of things. So we want to understand what is going to work. For example, we know what is not going to work. So we tried to do this. We said that bring your IC engine vehicle to us and we will give you an electric vehicle, new one, exchange. Because anyway, this has a residual value. I'll take that as a down payment for me.
00:50:17
Speaker
Again, the first month's experience, we thought we'll do about maybe at least 40-50 vehicles in the first year. We did one vehicle because people didn't want to give up their IC engine vehicle. So they still wanted that around. And in fact, we had a very interesting proposition. We had one guy who told us, sir, what I'll do is that I will ride my IC engine vehicle and I will come to your office and leave it there.
00:50:38
Speaker
Okay. You give me an electric vehicle and I will ride it for my deliveries. I'll come back and leave it back with you. Okay. So ridership is more important than ownership. And that's what is going to happen. And then finance companies like us, specialists like us will have to play a very big role in developing products around that. I want to kind of do like a timeline. So
00:51:01
Speaker
2017 you did two vehicles in first month. How did those numbers progress then? Oh yeah, so then we started saying that I think within the third month we crossed the 100 vehicle mark and the fifth month we crossed the 500 vehicle mark. Okay, so that's how we started doing and then I think if you look at our growth in Mumbai, we started opening also the other locations. Today now we are presenting
00:51:25
Speaker
close to about including the rural villages and all that places. We are present in almost about 400 odd touch points. We are quite branchless. We don't have branch offices, et cetera. Everybody operates out in the field. All the entire disbursement, entire operation, entire processing of loan is centralized at Pune. So we have a backend here.
00:51:48
Speaker
And so that does it. And so just to give you an example, last year we disbursed about 340 crores worth of loans. And this year we did 650 crores of loans. And the next year we are debating whether we should do 1,500 or we should do 1,300. So I think somewhere around that we want to do it.
00:52:09
Speaker
more than doubling. So what is driving this growth? Is it geographical expansion or is it that more people are opting for financing? What's the secret behind the growth? No, I would say that first of all, we are still very small.
00:52:26
Speaker
At Bajaj, I was accustomed to doing 50,000 vehicles a month. We are doing 10,000 vehicles a month. But reaching 10,000 in five years also is pretty good. So I think that's a good achievement for the team as well. We look at both. We look at the same store sale as well as expansion. Both. And it's a very healthy combination of both of them.
00:52:46
Speaker
So our market share has to increase in where we are present. And then we'll open up also newer outlets for this. So that's the expansion. And in the finance business, liability also plays a very big part of your ambition. For disbursing so much money, you should also have the capability of raising that much money. If you ask me today why I'm not doing 7,000 crores, I would say that I can do 7,000 crores maybe given a year and a half's time. But then I have to ensure that my liability side is tied up. So that's what would limit the growth.
00:53:14
Speaker
So that's why it takes time. So today, for example, we became very successful this year in doing poll ending with a bank. And next year, we are actually planning 50% of our business will be on poll ending. So slowly, now that the model has been proven, now the collections has been stable, everything has been good. We have survived one ILFS and three COVIDs. And so I think we have reached a stage wherein I think people have started saying that yes, they are there for the long run now.
00:53:40
Speaker
When did you get into new vehicle financing? You told me you're doing for Hero World. So timeline-wise, we started 2017, as rightly said, second-hand vehicles. So 2017, one year, we didn't do anything. Then 2018, we doubled a bit. And one of the failed experiments of trying to do in the same cities where we were doing second-hand vehicles, which are big cities, tried to do some new vehicles, but through a different vertical distribution channel, not through the main dealer, but through some broker dealers, et cetera. We knew that it was a little bit risky, but we still
00:54:10
Speaker
thought we had sort of things done, but we decided that it's not worth doing it because the numbers were also not that big. The next year was when we actually went rule and action. Also 2019 is when we went rule and then it was one hell of a growth actually.
00:54:25
Speaker
And so 2020, Rurael is when you got into new vehicle financing also, because Rurael is underserved by the traditional banks. Exactly. So we always knew about it. But you know, Boeing Rurael, you needed at least one company to tie up with you, actually, or one company to give you a chance to do it along with you, because there's a lot of diesel dependency and all that in this kind of thing.
00:54:50
Speaker
And that company, while it could have been Bajaj, but there was no point because Bajaj was so good at it. So there was no point in us competing. So we got a breakthrough with Hero and then we never looked back.
00:55:03
Speaker
And today, as I said, we're doing also Honda and we're looking at TBS now. And then timeline-wise, then the next year we said that, no, we have to expand the second-hand two-wheeler business. And that's when we started the marketplace, actually. And this year we rebranded our company into a completely bike bazaar. It is surprising that when I registered the company, I registered both in CMI and bike bazaar, actually, saying that at one day we'll do the marketplace, but that thing happened a little earlier.
00:55:29
Speaker
And so now we actually go under the brand name of Microsoft, which does a marketplace, which is basically buying, selling and servicing and financing. So you're building everything around the vehicle. So how do you refurbish? Are you building that in-house capability to like a servicing center and the mechanic and all that?
00:55:51
Speaker
We are building in-house capability in terms of knowledge and in terms of driving the customer. We are not investing in brick and mortar or the infrastructure. So it's basically a franchisee model, but branded by Bazaar. And so the franchisee brings them the investment, whether it is buying, selling, servicing, or whatever it is, but directed by us. So we have an excellent service team. So you follow the complete standard operating procedures and you do that basically.
00:56:19
Speaker
Like the franchisee gets a checklist like tenting, painting, oil changes, etc. Yes. So, yeah. And yeah, all that is there. And we also started training franchisees on servicing electric vehicles. Okay. Now, there's a very big misnomer that electric vehicles don't need servicing. Unfortunately, some of the OEs also feel that way. Okay. Nothing can be further from the truth. And we have seen it happen extensively that the electric vehicle needs also servicing.
00:56:45
Speaker
So, and very few service centers around. So we started training our people into, and the OEs are helping us to do that actually. So the idea is that you are a franchisee in service, for example. So you are somebody in between absolute roadside mechanic versus OE driven mechanic or whatever it is, a workstation. So the advantage of this person to tie up with us is that we are able to push customers to him because we are financing a lot of customers. So we have huge amount of database of customers that we can push.
00:57:14
Speaker
we are able to give him our wakens for resubmissionment which we want to sell for the raw. And we have started tying up with insurance companies to do cashless in his dealerships. So he gets that. And the fourth is that he starts getting spares and oils at rates which he can't negotiate and which we can negotiate and get it for him basically. So that's the model. So you end up owning the entire knowledge structure and the contact structure, but you don't necessarily have to own the screwdriver and the pneumatic
00:57:43
Speaker
No, lift or whatever it is. That's not needed. How do you keep the customer with you lifetime? Like you said that you drive servicing, like if you financed the bike of a customer, you would also recommend a service center. Is it through an app or is it through SMS?
00:57:59
Speaker
Yeah. So again, still a lot of work under development of this aspect. We are, for example, we still don't have a proper CRM and we just about three months back, we tied up with the Salesforce. So we started developing the entire thing. I think for first, a lot of this is coming out next month. So, you know, use the
00:58:17
Speaker
Once you have a CRM, then Salesforce is pretty good at these things. And once you start doing this, you start actually also developing also analytics and start pushing it. In India, I don't think of your digital model is going to work. You need to do a combination of a digital as well as a file center. Both you need to do both.
00:58:33
Speaker
And then you also need to have a place wherein the customer can finally go. And that's where the franchisee comes in. The last mile in terms of whether it's a buying or a selling or a delivery or a service will always have to happen either at the customer's doorstep or will have to happen at the shop. And that is where the franchisee network develops. So there are two companies in one, one which is actually developing the entire tech, you know, push these people into that and the other part which actually full sells that.
00:59:03
Speaker
Okay. And do you rely on any digital acquisition tools or is your acquisition through the dealer network? Yeah. So I would say that almost 90% of our acquisition is through dealer network. Okay. But we have a tie-ups with, for example, we have a tie-up with OLX.
00:59:22
Speaker
Okay, so for procurement of bikes. So whenever we see an ads there and all that, we try to procure it. But the journey is only far digital because then again, it gets transferred into a phone call and then finally somebody, a chat or something, and then finally doing that. We also have tie-ups with companies which actually push the customers to us. Okay, there are these specialist web companies. One of them are actually seriously looking at us as a long-term partnership with us. So we actually pull from there and
00:59:51
Speaker
then part of the journey is digital. In fact, you can have 100% of the journey digital. We have done that also. But we have seen that most of it becomes part digital and part piney fulfillment.
Risk Management and Financing Strategies
01:00:02
Speaker
But yeah, that percentage is small today. Still, it's about 10 odd percent. But I think it will grow, it will develop. And that can be our model by which we can actually even compete in the bigger markets.
01:00:13
Speaker
So how do you do credit and the writing? Is it like an EKYC and the person uploads a band or something? Tell me about how you do risk management. So again, it depends on the customer and depends on... We have two or three products, right? So the second-hand product acts a little different. As I said, the rural customer, there are two types of rural ones. One who has a banking habit and one who doesn't have a banking habit.
01:00:41
Speaker
So the journeys are different. I wouldn't say journeys are different. I would say the rules are different. So it's basically underwriting. You're underwriting two things here. The customer is also underwriting the product. KYC is standard, so you need to collect the KYCs, etc.
01:00:56
Speaker
RBI has now started allowing even NBFCs to use the ADHAR-based KYC, which they had ruled out about 2-3 years back. So we have applied for it. We'll get it fast. And then the journey will become still simpler. But today, other than ADHAR, we can look at any other piece of paper and we can authenticate it digitally, actually.
01:01:16
Speaker
And also our form, which has to be filled up digitally, it actually captures data from your KYC documents. So you take a photograph, it actually automates most of the stuff. Our journey, even today is not a customer direct journey. It's an assisted journey because even today, the dealer trials. So our first one is there, our DMA, our sales guy is there who actually does this. But the same thing can become a customer driven journey tomorrow if you want to do it.
01:01:44
Speaker
He takes all the photographs, it gets filled up, it goes and automatically hits the site of the credit bureau. You get the credit score immediately. And depending on the credit score, there's a rule engine, actually, depending on the credit score and depending on whether he's a customer who's with income proof or without income proof or whatever it is, it throws up certain things where there is either a fast track approval, wherein a soft approval is immediately given.
01:02:10
Speaker
Or there can be an approval which says that this approval will be given only after we do a telephonic verification. Or it can be an approval which can be done only after doing a physical inspection of his place of residence. So 40% of our customers, we do a physical visit. So then the loan will take about a month, about a day to get approved.
01:02:35
Speaker
Also, a lot depends on what kind of bound payment you're putting up. So depending on the bike, for example, if they are these 100cc spenders and all this kind of bikes or active or whatever it is, 100cc bikes, we see the risk much lower there because the resale values are pretty high there. So we are able to go at a higher LTV. But if the product is a bigger product,
01:02:59
Speaker
Okay. And especially if there's a product customer mismatch, then we may not even do it. Or if we do it, we might do it with a higher LTV. Okay. So what do you mean product customer mismatch? You are a delivery boy and you want to actually buy a bullet.
01:03:14
Speaker
Yeah. Okay. Okay. Got it. Okay. So your income is coming from deliveries. Okay. And so you may not be able to afford the ability of mines or neither the maintenance. So that's the mismatch I was talking about happens because there's nothing wrong. People have aspirations and they need to grow. So it was a bit of counseling saying that you don't even have a credit score. So you start with something which is.
01:03:36
Speaker
a little smaller and build up your grid score. So that's one of the things which I've seen is that there's a huge amount of demand or there's a huge amount of latent demand for higher end bikes in the smaller towns and smaller villages. Unfortunately, for some of the OEs, I don't have deep dealerships there. And also, you don't have any very great announcers many times. The exception, of course, is companies like Bajaj, etc., which does an excellent job of it.
01:04:02
Speaker
So one of the reasons Pulsar has grown so well even now is that more and more of tier 2, tier 3, while people are riding with a Pulsar. Yeah, it has the same appeal of an iPhone for a certain category of people like having a Pulsar or one of those premium bikes.
01:04:19
Speaker
So like 40% of people who take loan from you are like new to credit. Like you said 40% is home visit. This would typically mean they don't have a bureau score. No, no, it's more than that. It's about 60% are dedicated. It's not that all new to credit, we visit thousands. So yeah, so it's almost 60%. Okay. So if the income process like reliable, then you don't need to visit. Yeah, that's there. Reliable is there. Lori gives a four applicant.
01:04:45
Speaker
Or one of the big advantages of doing in a rural belt is that most of the people have their own houses. And it's very easy to get the own house proof. So we have developed all of it. Now what happens there is that, see, I'm coming to buy a bike and I say that I have my own house. But actually the house is not in your name. It's actually your grandfather's name. And you are staying in a joint family where you are also one of them.
01:05:10
Speaker
Now, if I'm able to first prove that this guy has a connection and he's a grandfather, and I'm able to prove that that document is genuine through the online, there are a lot of online verifications which you can do, then I don't need to visit his house. So it's proven that and it's own house. So we get a lot of comfort from own house because then it gives a kind of stability. So the challenges of doing business in Eastern UP is actually a little lesser than the challenges of doing business in Bangalore actually.
01:05:40
Speaker
And I'm very happy that people don't do it. So it's good. That's amazing that there's so many people you are bringing into the credit network, giving them a credit score. Amazing. And that's where I think the banks are getting interested in doing co-lending along with us because they feel that then this is a product which you tested it out and now the customer has done it. Now you can actually give a
01:06:03
Speaker
other loan and all that. The other thing which I wanted to say is that sometimes people ask me that, are you not like an MFI loan? Actually, it's very different from the MFI loan, from the way it is procured to the way it is collected and all that. And we have seen this. We have seen MFI is trying to do approval of business and really not succeeding because the collection pattern is very different.
01:06:26
Speaker
Okay. It is not, of course, it's not a group thing and you're not dealing with women, mainly you're dealing with men now. Yeah. And so the collection is very distant here. And what is your collection strategy? What do you do if someone doesn't pay? What does, what does that piece of the business look like? Yeah. So I think there are two parts to this business. One is that how do you buy credit? Okay. And the second is how you collect.
01:06:48
Speaker
Now, so normally in every business, this needs to be balanced, actually, that you buy good credit, then you collect also very well. Buy credit, this term refers to giving loan to good. Giving loan, yeah, sorry. It is a typical industry terminology. This is the first thing I asked when I joined Bajar Auto Billa. I said, what is this buy credit? So basically, you're giving a loan.
01:07:09
Speaker
So when you're underwriting alone, simple exact. So in the two wheeler business, if you cut the thing very, very fine, you may end up with having hardly any customers there.
01:07:21
Speaker
So it's essentially a collection-led business. It's more collection-led business. And it is not as if the customer doesn't have intention to pay, but the customer is a customer who may miss certain payments. And as I said, even if you have an act-minded, the check may bounce, and you need to collect smartly so that it is doing it. So you need to create a good collection infrastructure.
01:07:47
Speaker
And at Bajaj, we had an outsource collection infrastructure. But somehow that's one thing which we didn't pick up from Bajaj. We did it differently here. Most of our collection is in-house, actually.
01:08:00
Speaker
And there's a lot of advantage of having an in-house collection as COVID proved also to us, is that you are able to actually know exactly what's happening to the customer. Remember that you sell only once, but you collect over 24 months. So you need to be in touch with the customer. And if you have your own team, you are able to touch base very well with the customer. You know exactly what's happening to him. So we have a bounce and the bounce gets collected at almost a 96% efficiency.
01:08:27
Speaker
Okay. And you still have customers who will flow to the next bucket and then the next bucket. And then at some stage, you may have to repossess the vehicle. So if you are repossessing the vehicle, it's a very well thought of decision that you need that either the customer is having major issues or he doesn't have intention to pay. So you repossess the vehicle and then you use agencies, but you control the process very tightly.
01:08:49
Speaker
You ensure that you follow legally all the steps. You first ensure that you're assessing the right vehicle, et cetera, and all that. So those are trade secrets. We do a good job of it. And so I think that's it. So if you look at it, 50% of my manpower, or more than that, actually, I think, 2% or more is actually in connection.
01:09:07
Speaker
And this would be like call center or on ground, all types. So what happens is that the moment is from, it's like an army-led operation. From the first of the month to eighth of the month, the call center will be calling. Basically, these are customers who have normally always bounced their payments but have failed you.
01:09:27
Speaker
So you know that he's going to bounce anyway. So why are you waiting for the bounce actually? You don't have to wait. You can walk into this Ayrton counter and pay. We are tied up with Ayrton. Yeah, you can do all that. So you do that. Then on the eighth of the month, we back. And by 10th, we get the bounces. And then whatever remains, that most of our field team now. So then they start
01:09:52
Speaker
Then first way, the field team is busy collecting the older areas. So this is the, so there's a cycle which gets followed. There's, there's a full structure behind it. That's the reason I said that we can do 7,000 clothes tomorrow if we want. We created the entire structure for that. The playbook is really easy to scale now. Well, the playbook is there. The people are also there actually. So we need to only, we need to only create food social soldiers as we go ahead. So that's.
01:10:18
Speaker
So after that first fundraise from Elihuap, how did you fund it subsequently?
Funding and Financial Structure
01:10:23
Speaker
So we did a second round of funding, I think it wasn't 2018, where a new investor came along with Elihuap, the investor for fairing capital. So Aditya Parik, the son of Deepak Parik, he's on the board of a company. So they invested in the company. And now we are just in the midst of our third fund raise. We have just tied up. But enough is to say is that we are raising close to about $240,000.
01:10:48
Speaker
Okay. And so it's a combination of existing investors and a couple of new investors who are coming. And this is all equity funding? Are you taking data? No, this is equity, but we also, you can't run the company only on equity. So that is a, that is a continuing process. And so that is a continuous process. And like, I think if you look at our balance sheet till now, we must have borrowed at least our 450 odd quotes.
01:11:13
Speaker
So you need to, otherwise this business will not make money. You have to have 1x3, 1x4 kind of debt to equity ratio. You need to work. And that's where you keep on improving your operations, your credit ratings, then bringing down the cost of funds. So that process takes time, actually. How much does debt cost you and at what? What is your average interest rate when you give out a loan?
01:11:34
Speaker
Yeah. In the sense that usually our, you know, how you can look at the entire fast structures in the sense, it's just very small ticket load. The average ticket size is about 60,000 rupees for a new vehicle. And for second hand, it's still further down. So 35,000. So the percentages sometimes don't make sense because they look a little bigger. So you actually land at about 21 to 23% and some amount of processing fee you charge and you are able to borrow at about the percent net actually. So that's what you're able to do. So the rest is used for operations.
01:12:04
Speaker
Okay. And what is your NPA ratio? So in this business, you can expect an NPA at a very mature level of business, anywhere between 5 to 6% gross NPA, but your actual losses will be around 3%.
01:12:20
Speaker
Okay, because you can repossess the vehicle and you can repossess, you can collect and do all sorts of things. So that's it. But we are today operating at less than, at the peak of COVID, as I said, we reached 6.8. Today we are operating at 4.4 or 4.5 or something like that. Do you want to go there at 2?
01:12:40
Speaker
founders I have recently interviewed and they are also in the two-wheeler space. So I'm just, I don't know if you have time to answer this one more question. So one approach is the credit approach. Well, they're saying that we want to focus our energy on acquisition, like acquiring used bikes, because if we acquire the buyers are there.
01:13:01
Speaker
And that is their primary focus that how do we scale up acquisition of used vehicles and therefore they spend money on digital marketing and other ways so that anyone looking to sell a bike sells it to them, which I thought was an interesting perspective. And then I also interviewed auto capital and so they are doing like a leasing
01:13:22
Speaker
that, why do you need to buy a vehicle? Just take it as a subscription and pay us as subscription fees and all. So which of these models seems appealing for you to pursue going down or do you want to do something different or a mix of both? So I would say that we are a full scale law to wheel a company now.
01:13:40
Speaker
So leasing is one of our products. So leasing is, I would say, one of the products. And we feel that leasing is going to be very important, mainly on two kinds of products. One is the product has to be an expensive product. Usually, I have not seen leasing working on a computer product.
01:13:58
Speaker
So it will work on a bullet or it will work on something like that. And if you have the appetite, then it will definitely work on on gukatis, etc. But that's very dicey. So you don't want to get into that territory. But I would say that releasing a bullet or using a punser or using a KTM is something which we already do. So it's part and parcel of a business model. It's just one more financial model.
01:14:19
Speaker
So that's there. The second is that when we're talking about our marketplace is that I think both are important. Buying and selling both are important. And even servicing is important. See, unless you control the entire chain of this. And when you are also financing the product. So you're already at the dealership, your exchange becomes so much easier. So it is like an integrated approach that we are taking here. We started to build our finance company first, because that is the most crucial thing. The whole world runs around the finance sector.
01:14:49
Speaker
this entire thing. And then we are now adding these elements, which will complete the entire cycle of the product. So I would say that our model is pretty much an integrated model, especially when you're talking to a dealer. When I talk to a dealer and say that, look, I'm financing a product, can I also start exchanging in your vehicles? For you, for him, it becomes a solution in itself. And then when I tell the dealer that what
01:15:14
Speaker
why don't you just open a small showroom and actually start selling these bikes that can help you to do it, basically. So it adds not only some income to him and he doesn't have unrealistic expectations on the income because for him it's an add-on income. But he knows that if he does that, his sale of new vehicles will go up. So I think all these things are tied with each other. So it is difficult. I'm not saying it's impossible. I would say that breaking this into pieces and doing one part of it is what maybe tomorrow you can become an acquisition target then.
01:15:43
Speaker
for somebody who doesn't have it. But I don't think we are building our company for acquisition, we are building it for something else altogether. But is acquiring supply something you want to do aggressively? Like anyone selling should know that, okay, I should sell through Bike Bazaar. I don't understand the word aggressive. So I think we will buy what makes business sense actually.
01:16:04
Speaker
And I think burning cash is no longer an option for anybody actually. You can have different profitability of the bikes. Since we sell the bikes also, we know exactly at what value we should buy it actually. Sometimes it's better to walk away from the deal rather than do the deal. See, one of the things that I have seen which makes me a little worried is that huge amount of inventory is piling up about people who are buying very recently. It's a worrisome thing because it's a perishable commodity.
01:16:29
Speaker
The moment the year changes, the value depreciates. All that is there. And finally, if you go back, and I have a lot of respect for the secondhand dealer fraternity. They have been doing this business for donkey's years. I'm struggling here to value the bike. I'm using tech. I'm using that. This guy just on a phone call, he's able to give a quotation and he's able to hold the bike and he's able to sell it. So if you have to do a deal with him, I don't think that you will be able to do a very, very good deal action.
01:16:57
Speaker
So essentially, the dealer remains your primary partner. Hope you want to empower.
01:17:02
Speaker
I think so. I think so in one way is that it is a business wherein you should use the ability of a businessman. I would like to multiply my entrepreneurship journey into thousands of entrepreneurs because that adds the boost and that adds the volume to me really because what an entrepreneur can do, trust me, it will be very difficult for an employee. Absolutely. And our franchisees, we do not take a franchisee unless you put some
01:17:28
Speaker
at least five lakh rupees of the depositors. Because we believe that if your money is not in the business, we don't give credit. So if your money is not there in the business, then you do not do the business actually. You're not in business. You're not an entrepreneur if you don't have skin in the game. It is
Future Business Models and EV Market Preparation
01:17:45
Speaker
table six. And when we started wheel CMI, we as promoters, we put in our own money first.
01:17:51
Speaker
So when we went to the market, we told them that we put our money and I think that helped us actually a lot. And in this round also, we are putting our own money again. The long-term path for you is in IPO? I don't know. I don't know whether IPO or whatever. So whatever makes sense at that time, anyway, we are still about four or five years away from whatever we want to do. So whatever makes sense at that time, we will see everything is open.
01:18:18
Speaker
We don't know how the business mornings are going to shift. One thing I've realized in life is never predict anything actually. Yeah, we don't know how EVs will change the market. But I suspect EVs would really work well for leasing, especially the gig workers would be happy to do a pure lease-based EV acquisition.
01:18:37
Speaker
but yeah it will work well with leasing but it is not that simple that it will be leasing along with doing something with the battery also so by the pay per use leasing is a straightforward it's no different than financing I essentially I don't see any difference at all there is just a residual value this doesn't have a residual value that's all now here what residual so tell me in the EV what residual value input if the battery goes away the residual value is nothing
01:19:04
Speaker
Okay, so leasing or leasing is equal to financing. So, so I think maybe there'll be a new name for it. It'll be almost maybe like a lockdown rental, like essentially. Yeah, it's like that. So pay for dues kind of thing or you actually lease the bike and don't lease the patent.
01:19:22
Speaker
Okay, you lease the bike and rent the battery. So all those kinds of things people are doing these kind of models and all that. So I think, but again, I don't think you cannot do this unless you have a good distribution network.
01:19:34
Speaker
And that's what we are building, actually. A tech company enabled by a distribution network is what is going to make the difference. Do you see EVs as being a bigger part of your lending, like the revenues, going forward? Or do you think it will be IC? I don't know. Frankly, if anybody today is able to answer that question, we should go back after five years and ask them. So let me do this way that I don't want to predict the market, but I want to be prepared.
01:20:00
Speaker
So today in our company, we have a separate vertical which handles it. So the EV is handled by a separate set of people. We are very interested in doing all kinds of experiments. We are about to finance 50 odd vehicles, wherein we're actually not financing the vehicle, we're financing the kit and the battery, the kit which converts the vehicle and the battery.
01:20:17
Speaker
Okay. So that's, so we want to try all this out. We want to pilot all this. We want to keep in mind certain learnings are already there and so that you're prepared. And today we are consistently doing what 300, 350 numbers of EVs every month, anyway, normal financing that we keep on doing. Okay. So we have already got experience. We have repossessed vehicles. We are sold vehicles. We are done all of that. So I think so really doesn't matter if the market completely becomes EV also we are ready. So we're there.
01:20:47
Speaker
Do you see a run-off IoT in the EV business? Because you could track where the vehicle is, how much it's being used, and for repossession also it will help. Or you could even do something like just disable the vehicle if the installment is missed and things like that through an IoT. Sure. In fact, we developed an IoT for the IC engine vehicle in 20... I think it was in the year 2007 I had developed an IoT. Oh, wow. Okay, with it.
01:21:14
Speaker
Yeah. So, yeah. But of course we never used much of it. But IoT definitely will help. Especially IoT will become mandatory after a period of time for doing this kind of things. This is like a follow on conversation.
Empowering Women Through Two-Wheeler Ownership
01:21:31
Speaker
And since we last spoke, you raised a pretty big $20 billion round. I just thought we'd add some of that in the show to make it more topical. So tell me about that. Yeah, okay. Yes, we did raise that money in the bank.
01:21:43
Speaker
situation now. And we have a new investor who has joined the captain and it's a company called Women's World Bank based out of New York. The mandate of Women's World Bank really is actually to fund companies which are into predominantly, which are into doing business with women in the sense that basically giving loans or empowering women in any which way that they could. And I think this is the first time that they have, I think, invested in a two-wheel account. And we have actually for a long
01:22:11
Speaker
been saying this, that Women on Wheels is actually a very empowering kind of a project that one can have. Almost 26% of two-wheeler riders are women now. And I have personally seen this even in smaller towns, also smaller villages now, women are riding quite a lot. And this is really directly related to the fact that they are able to further their education, they're able to do more business, they're able to have employment.
01:22:35
Speaker
So I would say that a two-wheeler is the quickest way of empowering women in India today. And in fact, when we are looking at electric vehicles today, I see that the percentage of women who are buying electric vehicles is more than the percentage of women who are buying icy engine vehicles. So they are also taking to electric in a big way. And I think it's very topical.
01:22:52
Speaker
We're happy that Women's World Bank has come in and invested in our company and so our entire engagement with them is more than just receiving money. It's more also engaging them with programs as to how we can get more and more women to ride on two wheels. So would you be like subsidizing for women or would you like just create more marketing and communication and make it easier for women to buy?
01:23:16
Speaker
So subsidies are never a big answer to this. I think while, yes, we are running programs where there are certain discounts where women borrows from us. So I wouldn't say that they're highly subsidized, but there is a difference in the rate. There's a difference in the processing fee. There's more to encourage women to actually borrow and write. But I think more important for us is to run specific programs on certain categories. And here also we are looking at really the bottom of the pyramid.
01:23:40
Speaker
So we are looking at professions like beauticians, women who actually come to your home and do the beauty makeups. Yeah, like the Albert Lab partners. Yeah, we have quite a few beauticians who borrow from us. We are looking at women like the women who are in the healthcare sector, whether they are nurses, whether they are Hasha workers. So I would say that category-wise run programs for them.
01:24:00
Speaker
Are you directly collaborating with platforms like Urbanclap? That could be an interesting unlock. No, not really. Not directly collaborating with them. But I think we have actually funded quite a few of women who are actually in Urbanclap. And so word of mouth has spread and people do come to us directly.
01:24:15
Speaker
And what valuation did you raise it if you are at Liberty to share? So the fundraiser is still not over. We have another 80-odd crores coming into the company, hopefully in the next two or three months time. We're very close to closing that also. So my last question to you, what is your advice to our listeners who are considering entrepreneurship?
Entrepreneurial Insights and Closing Thoughts
01:24:34
Speaker
It's not as if that I have seen it all, done it all kind of a thing and every journey is very different and can't have a template really. But one or two things I would definitely say is that I don't know if you understand India and let me just translate that. I think there's a lot of enthusiasm and there's a lot of energy and that is required. Without energy, you can't be an entrepreneur.
01:24:54
Speaker
And you have to have a lot of belief in yourself, a bit of madness you should have. But along with that, you also should have some kind of a logic, some kind of a, I see a lot of times, business models are not completely vetted out. The day that you depend only on valuation is gone. I mean, if you do not have a business model, which shows profitability, if you do not have a business model, which shows, you know, that there is a revenue stream, which is coming in, then it's very difficult to raise money and it will not sustain. So pure tech without business, I think those days are gone.
01:25:23
Speaker
So that's there. The other is that choose your co-founder or co-op promoter very well. Skills should not be similar. Skills should be quite supplementing each other. I see a lot of time it's the same skill sets which all the co-founders bring in and that becomes difficult many a times. So this is the second piece of advice and third is that don't lose heart. It's a tough journey many a times. Yeah. How great. And the earlier you start, the better it is. That's what I would say. I started very late in my life, but yeah, I wish I had done that earlier.
01:25:50
Speaker
That came with its own set of advantages. I'm sure you did not have to make so many mistakes. And the scale-up, you would have understood the playbook for scaling up. I would say yes and no. Yes, in the sense that we always thought about scale right from day one. And no, in the sense, maybe we are a little conservative. Maybe we should have been a little more aggressive. So that's there. But yeah, I would say that we have a very young team also, having said that, along with us. And we have our investors who are very young. So I think we have a good mix right now.
01:26:17
Speaker
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