Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
Heralding The Evolution Of Banking-Tech | Mandar Agashe @ Sarvatra Technologies
161 Plays3 years ago
Unified Payments Interface or UPI enables instant and hassle-free fund transfer between accounts and has been one of the biggest disruptors of the Indian FinTech industry.
In this edition of Founder Thesis, Akshay Datt speaks with Mandar Agashe, Founder and Vice-chairman, Sarvatra Technologies, a Pune-based company, which through its platform, has become the true enabler of India’s digital payments.
Mandar started Sarvatra back in 2000 to bring the best banking services to the underbanked people in semi-urban and rural cities by providing tech support to the cooperative banks. And thanks to the digital boom and quick smartphone adoption, Sarvatra launched ‘Sarvatra EFT Switch’, a PaaS (platform-as-a-service) solution which enables banks to allow UPI and IMPS transactions.
Tune in to this episode to hear Mandar speak about how Sarvatra is promoting financial inclusion for the country’s underbanked population through its unique solutions.
What you must not miss!
- The concept of PaaS (platform-as-a-service)
- The challenges in setting up tech support for coop banks.
- The impact of demonetization of the business
Recommended
Transcript
Introduction to the Podcast
00:00:03
Speaker
Hi, I'm Akshay Hi, this is Aurabh and you are listening to the founder thesis podcast We meet some of the most celebrated sort of founders in the country and we want to learn how to build a unicorn
00:00:24
Speaker
We're all aware of Gen Z FinTech founders, people whose photos come with news articles announcing massive fundraisers. But I'm personally a lot more inspired by founders who started up in an era where the enabling factors of starting up were just not there.
Founding Sarvatra in the 1990s
00:00:42
Speaker
And today I'm talking to one such founder who is Mandar Agashe. Mandar is the founder of Sarvatra, which means everywhere. And Sarvatra is literally everywhere. It's powering the plumbing of our financial system. It's what enables the next-gen payment companies like a Paytm or a Google Pay or a phone pay to exist today. And Mandar started up way, way, way back in the 90s when even the word startup did not exist. He was starting a business, not a startup.
00:01:10
Speaker
And this is really a masterclass in the evolution of the payments and banking space in India. Listen on as Mandar talks about starting up when he was just a 20-something kid. Within weeks of coming out of college, I started a software company.
Early Observations in Rural Banking
00:01:27
Speaker
And at that time I was exploring what to do. So a lot of my friends who had graduated and started doing some brainstorming, but eventually almost all of them went to US for a job. And what I focused on trying to create something. And of course I was looking to create a product, software product.
00:01:51
Speaker
So that is what I was focused on. And once, of course, I had to learn the family business. So whenever I used to go to our sugar factory at that time was in near a close in Solapur district.
00:02:07
Speaker
So whenever I used to go there, I used to see that there were no ATMs there, no debit cards. There were lots of banks on the way I could see. But there was no ATM or debit card. You have to carry cash with you. And if you want to spend something, it was always cash. And similarly, any of those guys, when they used to come to the city, they used to always, you know, have to carry cash.
00:02:31
Speaker
So I just researched little bit on that. But this would have been much later, no? Or was it in 1990 only that you saw this problem? No, I saw it at that time only. Right, sir.
00:02:44
Speaker
When you started a software company in 1990, did you start with some project in hand, some client, or you started with this idea only that...
Digitizing Family's Cooperative Bank
00:02:56
Speaker
At that time, it was thinking of how we can... In my family, there was a small bank and there was no good software there. So I said, okay, can I try to computerize?
00:03:10
Speaker
all ADP departments and computerization and this and that so the thought was can we computerize the bank and that's how we started little bit you know I started tinkering with the whole thing and started going up the learning curve you know and went on for a couple of years while I was learning the family business I was looking and that's when I founded the software company
00:03:38
Speaker
Okay, so basically first couple of years after graduating, you were involved in running the family business and as part of it, you were also involved in digitizing the cooperative bank that was owned by your family. Yeah, that's where I learned, okay, what is banking, what is banking software, you know, all those things I got to know. I was also trying to put ERP systems in my other businesses.
00:04:05
Speaker
So I was getting exposed to what products are available, what is not available. And it was a very initial phase. And I was running the pharma group of
Exploring Medical Software
00:04:17
Speaker
the company. So I was getting exposed to how the pharma industry works. And then I thought, OK, can I get into medical software? I was exploring things. I was thinking, what could be that big opportunity?
00:04:34
Speaker
In fact, one of my first pathways I did was for Tata Cancer Hospital. I did a cancer research software for them. And it was inaugurated by Mr. Ratan Tata himself. And he really liked whatever he was doing. And he said, you know, keep on doing this. You're good at it. So the first encouragement I got was from Mr. Ratan Tata himself. And that was the journey.
00:05:03
Speaker
So when did you like full time get into software, like, you know, left the other family businesses?
Focusing on Software Industry Growth
00:05:09
Speaker
So around, I would say, around 96, 97 is when I realized that this is a very big opportunity. And by that time,
00:05:22
Speaker
I was visiting my friends in US, you know, when I was travelling, all my friends had gone into different companies. And that sort of industry was really, really growing. One of my... I think it was this IPO had also happened now around that time. I was not aware of it. The other thing is that then I... Then it happened later.
00:05:44
Speaker
Yeah, then I went to US, one of my mamas, which is brother of my mom, used to work on mainframes in the US.
Inspiration from Steve Jobs
00:05:57
Speaker
So he took me to Comdex, which was one of the leading, what you can say, leading festival of hardware and software and gadgets and so forth. And there the keynote speaker was Bill Gates.
00:06:15
Speaker
So we went all the way, drove down from LA to Las Vegas just to be at the complex. So that I got here, Bill Gates speaking. And we reached late and the hall was closed. In front of that same hall was another keynote speech being given by a relatively unknown in India kind of a guy.
00:06:41
Speaker
And that keynote speech was given by a founder of a hardware company called NEXT. Next.
00:06:51
Speaker
and that guy was in jobs. What do you say relatively unknown in India? Because at that time Bill Gates was very very popular and I actually got a demo of you know presentation keynote speech and there was very few people in the hall everyone had gone to the big hall and
00:07:15
Speaker
First and I was exposed to the brilliance of Steve Jobs and I could see and there he showed the power of relational database.
Relational Databases Revolution
00:07:27
Speaker
So he said, what can happen? And he actually was specializing in database software. And through graphics, he showed how he could connect different databases. And that could lead to a complete revolution in this. And that's when it hit me. The new thing which is around database is going to be very, very big. And he gave example of banks, how you can do things like that.
00:07:56
Speaker
and eventually that thing was I think taken up by Oracle. Tell me something like what was the scenario pre that time and post relational database you're saying is like was a game changer.
00:08:13
Speaker
Yeah. Can you help me understand how, like what was the situation before relational database and how did relational database become a game changer? So it was like what you call big data is what it was in those days, right? Only mainframe that is entire big data. And then you have to put everything into that big data and then you do research on it or do data crunching and all that. And that's why you required mainframes and whatever supercomputers and everything.
00:08:39
Speaker
But when the smaller computers came, it was a relational database that need to basis you can connect databases and do some sort. I guess the example you will have a database of only name and address. And then you'll have one more database of say name and age. And then you connect both and you want to know all people with this age staying in this pin code.
00:09:04
Speaker
you know, then you could connect two databases and that's what Steve Jobs actually showed on speed. Just by drawing a graphical line between these two databases, now you could search across both. And it like blew my mind, you know. I said, wow, you know, this is going to be that big game changer.
00:09:21
Speaker
So pre-relation
Collaborations and Early Sales
00:09:23
Speaker
database, databases did not talk to each other or they talked to each other only in a mainframe environment and not on a personal computer. No, the initial relational databases were there, but the power, see what, Steve Jobs is a dreamer, right?
00:09:40
Speaker
there were smartphones before that also but what he could do with smartphone music players were there now but what empathy were there they were getting but empathy player no one could imagine you know he had the power to make complex things simple
00:10:00
Speaker
And that's what actually happened. Otherwise, the jargon was always there. Data business were there. I had learned in my engineering also. So everything was there. But I could see the power of what can happen. And that's what kind of inspired me, OK, I have to be in banking software kind of. Because that was a real big thing happening.
00:10:29
Speaker
And around the same time, one of my college friends, he came back to India. He was an expert in Oracle. So we met after a long time and we got chatting and all that. And so he said, you know, I've done enough of this, you know, being in the service industry, working for multinationals. There's no fun in it. Finally, you are just a clog in the wheel.
00:10:59
Speaker
So I said I'm thinking of creating a product company and he said I want to work on a product. That's kind of we created the standalone software company and I started on that. So from 1996 to around 2000 we worked on you know creating the basic product and around
00:11:24
Speaker
This was a product for banks. Product for banks. And around 2000 to 2001 is when I had a chance meeting with the CEO of iFlex, Mr. Deepak Jesus. And he liked the product that we had done. And he said, iFlex and FlexQ, when our product bank is, we should work together. And iFlex invested into the company.
00:11:51
Speaker
And that was my first professional investment. We came on board and he's still on the board of 20 years. You were. But you had not yet gone to market like 2000, 2001 when I flipped. No, we were experimenting with known banks. So we had about 20 banks already on the platform by that time. But they were all friends or known people.
00:12:20
Speaker
But we had not really like gone to the market market as such. It was still experimenting in and around Pune 50 and Solapur and our catchment area. So tell me about your like, you know, how did revenue start? Like, how did you actually get your first sale? And, you know, how did a software product become a software like became a business?
00:12:50
Speaker
So in those days, there was a simple revenue model. You sell the software for a certain price, and you
Targeting Cooperative Banks
00:12:57
Speaker
have a AMC. That was a standard model. So in fact, I remember when I first went to pitch for the software to a village where the head office of that rural corporate bank was. And almost half of the village had gathered there.
00:13:17
Speaker
And when I went there, they said, no, no, that's all I've come to see the computer. Because they came to know that I'm going to bring a computer to show the demo. Or I carried a computer and that was the first PC to enter that village. So how would I come only to see the PC? Then when I said, OK, this much for the hardware and this much for the software,
00:13:39
Speaker
So that board said that you are giving a TV and everything in that price and only for that one chakti of software. There is no software, only for that you will pay a word. Flash drive, not flash drive either. That disk is to be there. That, you are charging same as this TV and everything. You know, hardware software, then we realize, okay, you have to give a combined product and you know.
00:14:06
Speaker
And you have to also, there's no electricity for hours. You have to also sell UPS to them and the bank. It was the entire bank. Why did you choose these banks? Why not choose metro based banks? Like you made your software for any bank or you made it for cooperative banks? No, we went into the known banks and they were all cooperative banks. And the large banks already had hardware and software from big companies and bigs.
00:14:35
Speaker
you know there was nothing in no market to go to an SBIO or you know like we are a startup now so we went to those banks who there was no software naturally we went there and that's how we slowly started what you can say giving that and then what happened is that I realized that even after all that
00:15:00
Speaker
there is no connectivity in rural India. So I said, what's the point in giving a four banking system when there's no connectivity only? That's what we started again, the phase two of the company of how we can create a point of sale based, you know, today, what you call micro ATM, where you can withdraw cash, you can do your balance inquiry and all that. But I looked at it as a CBS terminal.
00:15:32
Speaker
So I said that the cost machine could dial in on a copper line. There was no mobile also by the way at that time. So it was a cost machine which could dial over a copper line, connect to the central server and do a transaction. So it was a core banking system made for Roll India.
00:15:53
Speaker
And to create that, to create the switch. And you know, what is like today, the whole payment infrastructure is so common words and nothing. How do we make it happen? How do you make the customer's account portable? What's the challenge? Because the account was only stuck in that branch. Even the other brother, that he belongs to the same bank. If he carries a check, only he was known.
00:16:23
Speaker
So tell me something, what was the rural cooperative banking industry like at that time, like early 2000s, when you were going and selling to them? Same as today, that way, it was basically around... How big is that market? Because, you know, sitting in a city...
00:16:42
Speaker
I think of only ICICI, SBI, when I think of banks. So I don't know, is that a big market? The rural corporate banks?
Evolution of Cooperative Banks in India
00:16:51
Speaker
No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no,
00:17:12
Speaker
They were the last mile for them and most surprisingly all of them are called urban banks. They are called urban property banks. So many people in Mumbai said why are they called urban property banks when they are in rural India. I said that because you are looking the other way. For a villager he has to come to Taluka place which is urban for him.
00:17:37
Speaker
and there is no bank in this area. So he comes to urban area and he comes to Talupa place and it's an urban cooperative bank. So it's an urban bank for him because he stays even deeper rural. So that's what they call the urban cooperative banks. And actually they are in rural India. But I found that they were very, what you can say,
00:18:01
Speaker
Very innovative. Each cooperative bank had its own specialization. They are like the community banks of the US. US has a similar community banks. There are 15,000 community banks in the US. Again, very similar to Indian cooperative banks. There are similar... Is there a separate RBI statue under which they get formed and all? Because I know RBI doesn't give banking licenses easily. You are assuming India or in the US?
00:18:30
Speaker
In India, in India? No, India, same like US. Basically, this beginning of all this is in an institution called the Credit Societies. So, credit societies where some group of people come together and they create a financial institution, it's called the Credit Society. In US, it is called the Credit Union.
00:18:55
Speaker
So there are credit unions started in India by con farmers by different people or say employees of steel factory, they start a credit union. And that is how it started. And as those credit societies became very large, RBI gave them a license to operate. For example, Cosmos Credit Society, Saraswath Credit Society became Cosmos Bank and Saraswath Bank.
00:19:26
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. Okay, okay, okay, okay. You had to first be a great society and then you became a bank.
00:19:54
Speaker
But then there was no bank to service this rural industry and it wasn't affordable for large banks in the urban city to go there. That's when these corporate banks started emerging across the country. And then for every district, Robert came out with a district central corporate bank for a dispersal of loans, agricultural loans.
00:20:20
Speaker
So that became another large institution of its own, controlled by NABAR, which still exists today. So everywhere in the world, there are only two types of banks. There are either large banks, private sector banks, and there are corporate banks, every big country. You find it in Japan also, you find it in Germany also. India has a third bank called Agri Bank. And there were similar Agri Banks in China,
00:20:51
Speaker
Bank of China. So that's why we have such a beautiful financial system in India and then banks had checkbooks and credit societies didn't have checkbooks. That was the only difference otherwise they are exactly the same.
00:21:09
Speaker
And it was relatively easy for a credit society to become a bank, because I mean, if there are 1900 of them, then it might have been very difficult. There are certain rules that if you achieve so much of what you can say, accounting standards, you have a certain kind of a board, there's so much to deposit. The rules kept on changing every 10 years.
00:21:31
Speaker
Once you become a certain size, you can apply for a bank. Then you become a certain level of a corporate bank. Then you can apply for a scheduled corporate bank. So then when you become a scheduled bank, you can do more business. You can do Forex. You can open branches wherever you want. Earlier, these were like a local area banks. These corporate banks could operate only in that paluka. They cannot go beyond that paluka. Such restrictions were there.
00:22:02
Speaker
they couldn't give all the products that an SBI could give. They could only give represented products.
00:22:12
Speaker
So that is how we learned a lot and a lot of those knowledge got captured when we went to this 30 different corporate banks. We went with different corporate banks, you know, somewhere merchant corporate banks, somewhere agriculture producers, corporate banks, somewhere
00:22:31
Speaker
say milk cooperative bank, you know, somebody who milk industry. So one had, say 70% banking was similar, but 30% was unique to that community. That's why it's called community banking. So it is that community coming together. And that's why they have only certain kind of products, which is helpful to that community only.
00:23:00
Speaker
And till the early 2000s, they were working on papers. Yeah. So why up to 2000? I would say up to 2010.
00:23:14
Speaker
Most of them were not computerized fully. Once the telecom network improved and the cost of the hardware came down and the electricity improved and the battery life improved and the cost of the hardware as well as the storage reduced. That's when computerization increased.
00:23:34
Speaker
So the intention of compression was there throughout and also because there were lots of these BCS courses and so many computer courses which opened up in small towns. So there were also people available to run those competitions. So the whole ecosystem developed for 20 years.
00:23:59
Speaker
So you were in the right place at the right time when this industry was at that stage where computerization was inevitable and you were probably the only one offering it or are there other people also like your peers? There were many of them. I would say each one got about 50 banks and stayed with it. So there were 70 companies like ours in India at that time.
00:24:28
Speaker
Every state had its own small software company, product company, giving a similar computational product. So that is why in 2010, when I changed gears of Sarvatra completely, where I said, I can't do the same thing and I'll be nobody.
Shift to Digital Transactions
00:24:46
Speaker
I need to get the question before before you talk of changing it. So by 2010, what was the scale? How many employees? What revenue were you doing? About 30 to 40 employees were doing about two to three crore rupees of turn off.
00:25:04
Speaker
and we had about 40 banks and that was a straight of all the companies everyone had that similar bigger one would probably have say the biggest at that time was infrasoft with 200 banks and probably 70-80 crores of turn off
00:25:23
Speaker
But otherwise, I have to teach you today. And then there was this flexcube and finacle, which are global companies. Which are more for like these metro based banks. Metro also finacle and all were there. Flexcube was only global. So having an investment from flexcube did help us understand the software, how to
00:25:48
Speaker
view yourself how to organize yourself how to get the whole professional coming from our family business you are not used to many things you know because you're always the boss cousin so you always get treated differently you know you have to start behaving differently you know
00:26:11
Speaker
And like you are to have quarterly, so many things which I got to learn under guidance of iFlex team. And that helped us to think big also with more confidence.
00:26:28
Speaker
And around 2010, when actually I went to bring CBS to rural India through the boss terminals, that's when it hit upon me, oh, this whole switching and debit card and all is a very big opportunity. So that's when we applied.
00:26:47
Speaker
and that's when NTCI got formed and we became the first ASP to be allowed to issue debit cards to our banks. So then we shifted completely into switching and we partnered with the 70 small companies who are doing core banking systems. And we gave this as an add-on module to their product.
00:27:11
Speaker
So what does that mean? I thought debit cards are issued by like RUPay or Visa or MasterCard. What do you mean when you say you got permission to issue debit card? So we got permission to issue RUPay debit card. So if any bank wanted to issue RUPay debit card, they needed a platform. So we were the platform which enabled that bank to issue debit cards.
00:27:35
Speaker
Okay. So, Rupe has like multiple people who are issuing Rupe debit cards, like multiple private companies who issue Rupe debit cards on behalf of the bank.
00:27:51
Speaker
We are only running the switch. We are the technology service board. Okay. Okay. Okay. Okay. It started issuing. So we had a 30, 40 banks base to which we started giving the debit cards. So how did your revenue model change? Because the revenue model would have been like a one-time payment for hardware, software, and then a AMC, I guess. So from there we shifted to a transaction-based model.
00:28:21
Speaker
So, from there there was no hardware software to sell, it was all hosted. So, it was a hosted system, hosted switch and any of the banks could become partnered with us and they started issuing their cards. So, then the model obviously became the payment industry model which is a transaction based model.
00:28:47
Speaker
Like for every withdrawal or every debit card transaction, there would be some small percentage that you would earn. Correct. So that is what the transaction model happened. Hardware and all was a one-time investment for us. The bank did not have to invest anything. They had to buy their own ATMs and all that. That was up to them.
00:29:16
Speaker
But there was so many already established ATM's of large banks. So this issue a debit card, which the customers could use when I say so. Yeah, complete different business. And that's when I got investment from ICICI bank. Okay, so you said that an NPCI was formed in 2010, right?
Impact of NPCI Formation
00:29:41
Speaker
Like,
00:29:42
Speaker
2010-2011 is when the rupee got launched and we got the permission.
00:29:49
Speaker
So tell me about NPCI in Rupe and like that, from understanding how the business environment was evolving, like if you could help me understand that also, like what was it pre NPCI and what all did NPCI do? Before NPCI, example, all banks were into called bilateral treaties.
00:30:12
Speaker
So if ATSC bank wanted their customer to use ISIS Bank ATM, then it was a direct tie between these two banks. So each bank had a tie with multiple banks. And then they would do an end of the day settlement with each other, etc, etc. So then only these top 50 banks were working with each other.
00:30:36
Speaker
So when we put the switches in the cooperative banks, we gave a presentation initially to HDC bank added what you can say I could give presentation to Mr. Aditya Puri at that time and he really liked what we were doing and he said yes definitely HDC bank would like to they had a huge correspondence banking business with many cooperative banks
00:31:01
Speaker
So they would like to extend their ATM network to their partner banks. And then their partner banks could not afford to put their own switch and everything. So Sarotra became a good company to give them as a service, platform as a service.
00:31:20
Speaker
And then they could work with HDFC. So that is what our initial thought was. But then since NPCI got formed, RBI then said that now no longer bilateral types, you have to all tie up with NPCI and that became the central switch. So pre-NPCI and post-NPCI, that was a big change. And then once we connected to NPCI, we didn't have to go and talk to each and every bank individual.
00:31:50
Speaker
that became the central law. Okay, so what is the switch that you're talking about? Help me understand. Every bank has got two core platforms. All the branches usually connect to what you call the core banking system, where the whole accounting and everything happens. And all their APM, post terminals, debit cards, they go to the switch, electronic financial transaction switch, EFT switch.
00:32:18
Speaker
And that connects to the CBS. So what is like a server? It is a software.
00:32:27
Speaker
It's a company of software and hardware. So it redirects the transaction. So for example, every debit card or credit card, the first six digits are the, it's called a bin. It's identified from the bank identity number. So suppose you are having a card of HDFC bank and you go to an ICICI bank ATM and you put the card inside that ATM.
00:32:52
Speaker
the ATM will first take that data and send it to a switch of ISA Bank. So all ATMs of ISA Bank connected to the switch. So what does the switch do? It checks what are the numbers and based on the ISO though it is the HDFC Bank card. So it will immediately route or switch the transaction to MTCI.
00:33:18
Speaker
NPCI will redirect, again there's a switch inside NPCI called a national penalty switch. That switch will redirect it to HDSC bank because it's a HDSC bank card. HDSC bank, where it will receive that data on its switch. That switch will send that data to the export banking saying that it is, first switch will see whether the card is valid, expiry date is there, the pin is correct, whatever X, Y, Z.
00:33:45
Speaker
And then we'll just say you are wittering Python, but I will check in your upper monies there or not. Yes, it is there, then it will CBS will tell the switch. Yes, everything is OK. Good to go. It's a bank which will send the instruction back to NFS. NFS will switch it back to ICS here. Switch. ICS will tell the ATM please give Python box if you have the money. All this happens in a few seconds.
00:34:14
Speaker
the actual money comes out. And then end of the day, NPCI and NFS will say, oh, so many customers, ICS, I went to HDMC, so many customers, ICS, I went to ICS, and they will reconcile and say, who has to pay whom? And the end of the day settlement happens. So this sounds a lot like APIs, right? Like, what today? API? No, no, APIs is totally different.
00:34:44
Speaker
API is more application. Switching is like core infrastructure. Okay, okay. But APIs also allow different databases to talk to each other, right? Like this is essentially that only. Different databases talking to each other. No, no. These are not databases. These are switches talking to each other. These are bank switches.
00:35:07
Speaker
The core banking will have its own database. So API is very different. API is for your applications to connect to other applications or databases. That's very different from switching. Switching mainly drives the ATM, drives the machine, the cost machine. It drives the mobile app if it's connecting to it.
00:35:33
Speaker
Switching is more at the infrastructure level and API is more at the application level. Correct. Got it. Which is also an application. Okay. Okay. Okay. So once you got the NPCI license to issue, are you paid? That is when you were telling me about the next fund raise. Yeah. So that's when we got a fund raise from ICICI bank.
00:35:58
Speaker
to expand and do more of what we're doing. So then tell me the progression from there. So then instead of being one of many core banking software companies, you then became a... In their first switching company for cooperative banks. And that's when HDSC bank, ICSA bank, and then at that time, yes bank, XS bank, all of them partnered with us to sell the switch to their correspondent banking banks.
00:36:29
Speaker
What is a corresponding banking bank? So the small corporate banks who are limited to only certain functionality, you know, their customers want to give a letter of credit or want to give a demand draft or, you know, any of the other services. So they have some large bank that is called correspondence banking.
00:36:55
Speaker
So then they introduced us to all their correspondent banks. And that whole ICICI buying investment helped us really grow from just a small company with little banks. What was in it for, say, a yes bank to introduce you? Would they earn something from that? No, that's their relationship with their correspondent's bank.
00:37:23
Speaker
And the US Bank sponsors that bank. So the bin has to be sponsored. So that corporate bank did not have a bin. So the US Bank had to sponsor that bin. So they had to sponsor the bin, the relationship imposed. And how did the revenues progress from this? So 2010 you told me about 2CR revenue you were doing. So how did that progress then?
00:37:48
Speaker
So, example, we can talk of gross transaction value. So, initially, it was just a 2 crore kind of a revenue. And then, 2010, we started the first transaction. So, probably the first month, we did about 100 to 100 rupees worth of gross transaction value, the GTV. What is gross transaction value, like the total rupee amount that was... It's transacted on your switch, using your switch.
00:38:15
Speaker
deposits or transferred or whatever. And your revenue would be like some 0.0% of something like 0.0 something. It's really from switch to switch and market to market. So like that we started few thousand bucks then we went to ten thousand bucks and then we reached one lakh in a month and like that one crore in a month. You know a number of transactions also grew very rapidly.
00:38:45
Speaker
So there was a time when, you know, the target was to hit something like one lakh transactions in a year. And then it kept on growing and then new products got introduced by MPC, I call it IMPS, then APSK. When was IMPS introduced? I think 2012-13, around that time sometime.
00:39:12
Speaker
I don't remember exactly but around that time. And then came AEPs, then came UPI. What is AEPs? Like IMPS I know is like instant money transfer. So first there was the NEFT system in which there was like hourly system. Correct. So there was RTGS NEFT, then came IMPS and then came
Revolution of UPI and Digital Payments
00:39:35
Speaker
APS is other enabled payment which is which is UPI basically like APS no no APS is other base that instead of card plus when you have other number plus your fingerprint and whichever bank account is linked to that other number that is the bank account which gets used okay and then came the blockbuster UPI
00:39:59
Speaker
and then the entire game changed. Around that time is when ICICI bank became our customer.
00:40:07
Speaker
So they saw we are doing good. When we crossed the first 50 banks who came on our switch, ICICI bank really liked the progress. They didn't expect us to go from 0 to 50 in terms of debit cards so fast. And then they liked what we were doing. And then we got an opportunity to give a similar product for their rural customers.
00:40:33
Speaker
And that's how we slowly started growing into ICICI bank. Then we created the MPS switch for ICICI and APS and EPI. And now all their alternative banking platforms are servo3d platforms. And as I said, our goal was to do initially one lakh transactions a year.
00:40:54
Speaker
Then it was 1 crore. I want to understand this ICICI deal a little better. So ICICI already had all of the infrastructure in place, right? Like, what did they need Sarvatra for? They already had like the switches. No, they had earlier switches for ATMs and PoS and all that. With the new generation switches of IMPs and APS and UPI, we were the first ones to do it.
00:41:26
Speaker
And so the entire IMPS system of ICSA bank runs on Sarvatra? Yeah, ICSA, IDBI, so many things. So 250 more banks. Wow. Okay. Okay. And our platform is now in across 600 banks. Wow. Okay. Okay.
00:41:51
Speaker
Okay, and so when did you hit like one crore transactions annual? Like by which year did you reach that? So after, I would say after first six years. So about 2016-17. 2016-17, and then the demonation happened.
Growth Post-Demonetization
00:42:10
Speaker
And then boom, then everything changed for the country.
00:42:17
Speaker
After demonetization, till demonetization, we were going to banks to sell our product. And then the reverse happened. After demonetization, every bank was after us, please give us the digital product. It was amazing. And then that was, I would say, the real exponential growth of the digital part of the country started after demon.
00:42:44
Speaker
And immediately it was followed by growth in UPI and this whole Jandhan and Adhar. It was from 2016 to 2021. In five years, probably we grew 10 times. So what do you do currently? So one crore transactions per year, say. Now we do close to five crore transactions a day. Wow.
00:43:16
Speaker
And you also provide switches for UPI. Yeah, 100 banks or more than 50% of the banks in UPI are on our platform. And then we also started giving UPI connectors to the PSP apps. So Google Pay, WhatsApp Pay, PTM, all of them use server platform.
00:43:40
Speaker
What is PSP? PSP? What does that term mean? Payment service provider, PSP. So, for example, earlier you are a bank, or the issuer, or you are an acquirer bank. Two banks. Either you are an issuer bank or you are an acquiring bank. And money was always transferred from one to another. What is the issuer bank and what is the acquirer bank? Issuer banks means that guy who issues the card is the issuer bank, and the guy who installed the ATM is called the acquiring bank.
00:44:12
Speaker
So you acquire the transaction and you issue the cards, which were an acquire. And then with UPI, that whole concept came like a third party app, which is not a bank. You can also create a private platform. Otherwise, you only would have an ICICI bank, mobile banking app, HJSA bank, mobile banking app. The private apps started coming in after RBI thought of this and NPSA introduced UPI.
00:44:44
Speaker
It was like a game changer completely. In fact, all the global Federal Reserves and Reserve Banks come to India to study our payment system. We get so many inquiries from global banks, from developing countries, who just come and study what India has done. Like even the Google CEO said that Federal Reserve is trying to come up with a system in 2022 to 2024 called FedNow.
00:45:13
Speaker
So global CEO has gone on record to say that federal reserve should visit India and study NPC and UPI. This is like a fantastic thing for a country, you know. First time an Indian product is being like looked at as global. People are studying others, we are always studying other people. First time an Indian product is studied by global people.
00:45:45
Speaker
So, and you know, what is the kind of revenues that
Handling Transaction Volumes
00:45:52
Speaker
you do? Like, you know, I can tell you GT last year, we did a GT of $10 billion or $75,000. And we are growing at 30 to 50% year on year. Amazing. So your revenue would be like 0.0 something percentage of that. I can't disclose that.
00:46:15
Speaker
But roughly like in that range. I would say it's very small. But still satisfactory and you're profitable. Yeah, because the base is so massive. And is the payout different for different like IMPS, UPI, debit card transaction? Yes, of course.
00:46:39
Speaker
So what is the hierarchy, which is the highest transaction and which is the lowest? Obviously, UPI would be the lowest, I must say. Yeah, credit card transactions are the highest and DRUP is highest and UPI is the lowest. Who foots the bill for this when there's a UPI transaction?
00:47:00
Speaker
The bank does it because the whole idea of that is that though you may not get money for the transaction, the merchant will keep that much balance with the bank. So bank enjoys the current account flow.
00:47:15
Speaker
Which bank? The bank of the customer making the payment or receiving? Both. You will have some customers who are paying, so you have to give money in the account so that you can use the system. For example, we have done a study for a small cooperative bank that before we gave them debit card platform, when salary was deposited in the bank, next day there was a huge queue and people used to withdraw the money and go home.
00:47:46
Speaker
Once we gave a debit card, people stopped taking the money away because they know anytime they can go and take it. So that float which was 50 lakh rupees went to 9 crore rupees for that one small bank in rural India. So just imagine what UPI must have done to large banks. Because unless you have money in that UPI account, you will not be able to use UPI. And unless if you are a merchant, if you are getting paid by UPI, the money will come into the same account of the bank.
00:48:15
Speaker
So it's a game of float. Help me understand this float concept better. So when you say like float went from 50 lakhs to nine crore, how did that happen? What does it mean? Suppose you have a salary account in a cooperative bank. Okay. And you are getting say 50,000 salary. Correct. Normally you'll, if you didn't have a debit card or anything, you would go and withdraw 25, 30,000 because you will need it over the month.
00:48:42
Speaker
Okay, so that money is not with the bank now. It's in my pocket. It's gone away from the bank. But now once you've given a debit card, let it be in the bank, I can go to an ATM anytime, or as I need, I'll use it. So then the money remains in the bank, which is a low-cost deposit for the bank. So same way, if you are having a UPI connected to your account,
00:49:11
Speaker
You'll say if it passed the Sajar Akbar economy, then only you can use that UPI somewhere. Otherwise, you'll withdraw the cash and use cash everywhere. Right, right. So, yeah, with UPI, you don't even feel that you need more than 1000-2000 rupees with you because UPI is accepted everywhere, so... How you know any of you have passed the supply, then I can never. Earlier, you would have some money in your pocket, but that money is lying dead in your pocket. It's not earning you any interest also.
00:49:41
Speaker
Nor is it of any use to the bank also. But the service has been done. Plus there's so many things that RBI has to print and the cost of economy doesn't work.
00:49:56
Speaker
fascinating. I don't know if there's something which you would like to answer, but I would love to understand more about NPCI and what kind of, I mean, the evolution of NPCI. What was the reason behind UPI launch? What did they see as the problem?
Support from Pioneer Investor
00:50:19
Speaker
No, so basically NPSA started off by running national financial switch, correct?
00:50:28
Speaker
And whose brain site was NPCA? No, NPCA was formed by all two banks put together. They all put money and created NPCA. Okay, so this was not a government initiative. It was like a... No, no, no. It was all banks, IBA. In fact, the first office of NPCA was an IB office in Brevon Stadium. IBA is what? Like Indian Bank Association or something? Indian Bank Association. They created NPCA.
00:50:57
Speaker
Of course, with the blessings of RBI and full support of RBI. Then the whole idea was to make the country independent, to have a payment option of our own. So that was the goal. So NPTEL is like a for-profit corporation. It's not a... No, it's a not-for-profit organization. It's a not-for-profit organization. Section 25, I think.
00:51:22
Speaker
Okay. So the goal was to see what was the need, what was the, what you can say, identified need of the country when you have, if you have to grow the GDP, you need a robust, like it's part of the key infrastructure, right? Banks, banks and branches, you need digital infrastructure.
00:51:49
Speaker
You need so many debit cards, credit card, post terminals. So, started off that topic, Khutka card system.
00:51:59
Speaker
which is independent of everyone. Like how we have our own. Possibly cost also for the bank. Like the banks would be paying higher money to Visa Mastercard. So they wanted their own system. It was looked at Visa Mastercard. When you pay, your money is going out of the country. Why can't we have our own, you know? Like we have our own banks. We have our own things. Why not have our own debit card, credit card network?
00:52:26
Speaker
But I mean, banks are like for-profit bodies now. There must have been a profit motive for everything that they did. Of course, there was cost saving and everything. Of course, that was cost saving. But even if they had to pay costs, at least the money remained in India was a thought. And most importantly, you have control over your own destiny, your own data, your own whatever. That was the way it felt sufficient as a country.
00:52:57
Speaker
And in that comes in Sarvatra, which is digitizing India. And around that time, before ICICI bank, I got investment from a very key investor. So I got investment from Mr. Valabansali. Who is that? I have not heard the name. Valabansali is Chairman of INAM.
00:53:24
Speaker
What is Inams? I'm sorry, I don't know these things. Okay, so Vala Bansali is, I would say, the most pioneer investor in the country. He is the person who funded Infosys, the first IPO.
00:53:42
Speaker
So when he was the investment banker for them, and when, you know, so he could see the, like, Infosys becoming the lead of the R for the country, having our own IT. So he was a guy who invested in these, what you can say, today's huge companies. So he pioneered investing in many such firms.
00:54:13
Speaker
The list is endless. But let me look profile that even like you I had not even heard of him when I met him. His goal and my goal match that we wanted to do something for the country to digitize India and me being a product company when all my other friends and colleagues were
00:54:36
Speaker
into services I was into product and you know so he liked all that and he kind of also supported us not only financially but also giving the management guidance mentorship mentorship and you know and today is a chairman of Sarvatra technologies and she has been a huge guiding light for us and you know
00:55:07
Speaker
And I would say he is a stalwart of the finance industry in India. So Enab is like an investment bank. Yeah, it was the topmost investment bank in the country. So you see all the pioneering companies, you will see their investment banker was always Enab. In different ways. So not only software, whether it's software or entertainment or banks or just name it.
00:55:38
Speaker
And so that, see, it was, now I look back, I think it was quite a brave effort to, when, to just focus on giving a products in India, you know, being a product company in India. Like when I look back, I would think that, you know, I didn't, there was no so much analysis or internet or other things so much, but it was just what felt right with it. And that is still our mantra.
00:56:08
Speaker
I will do what was right. And when I was told there is some protocol I am PS, nobody knew what was I am PS. I said, yeah, we have to do it. It sounds great. And NPCR just kept on coming out with these great products. Like now that a new product that we feel will be very, very big is Bharat bill payments in BBPS. It is super where you can, you know, all types of bill payments you can do.
00:56:38
Speaker
So combination of UPI, BBPS, APS, example in this covid lockdown, the star product, everyone thinks it's UPI. Correct, but UPI of course is a star product. But the real, what you can say star product of NPCI is APS.
00:56:57
Speaker
where when the urban poor or urban labor suddenly went back to their villages, they found themselves with money in a large bank where their saving account was there in the city, but no branches around and no way to access it. They didn't even have a debit card. But they could go to a business correspondent and put the Aadhaar number and withdraw cash register using their fingerprint. No debit card.
00:57:27
Speaker
And high score transactions go up from like 2 lakhs a day to 60, 70 lakhs a day. If APS system was not there, I wonder what would have happened to those guys. When there was no way to walk to an ATM, banks used micro ATM and went to societies and gave people money. So tell me about the concept of a micro ATM.
00:57:55
Speaker
So micro ATM is nothing but an ATM, but instead of actual cash coming out of the dispenser, a person carries cash and water is a slip bridge of amount to the cash flow.
00:58:08
Speaker
So micro ATM is exactly ATM. Whatever you can do on ATM, it happens on the micro ATM, other than the cash dispenser. He has like a mobile app, which is useful. Mobile app or mobile pass terminal, point of sale terminal, mobile pass terminal. So he comes to you and you say, oh, I want to deposit 2,000 bucks. So then you put your debit card inside, put your PIN, put the amount.
00:58:33
Speaker
And a slip comes out. Yes, now you can deposit 2000. You give 2000 to that guy. Or similarly when we draw 2000. Or you can check your balance or you can check your mini statement. What does it mean by an ATM you can do there? Other than the... So ATM is automated teller system, right? Here is what you can say? Assisted teller. For some reason.
00:59:02
Speaker
And because of mobile it is portable. And this is also a unique Indian innovation or is it a global concept? You see pause, merchant pause are there globally. But using that merchant pause as a micro ATM is quite unique in the country. And who are the companies who run these micro ATM? Is it run by banks only like ICICI? Banks and their business correspondents.
00:59:32
Speaker
So RBI collected some people a business correspondent which are associated with every bank. So where branch is not there, a business correspondent is there. And are there private companies also that run these micro ETMs? Yeah, so business correspondents are all private companies.
00:59:51
Speaker
Okay, but these would be like mom and pop entrepreneurs, like not large companies. No, no, no. Large companies, like Sarvatraya is a business correspondent, like there are many top class business entrepreneurs. What is this business model, if you can help me understand? It's the same transaction based, no difference, but you are only doing the last mile.
01:00:13
Speaker
So a business correspondent company would be a company that would have, let's say, these micro entrepreneurs who are carrying around pause machines or they install a pause machine in their shop. Or not necessarily, or it could be a company like Sarvatra who says, OK, in our branches of our corporate banks, we'll set up a micro IT. So it may not be only a moment for us.
01:00:43
Speaker
And these companies would... All telecom guys, you know, telecom guys are doing business correspondence. So an ATEL store would also have a POSS machine like ATEL. Okay. So ATEL would also be running a correspondence business. All medical outlets are doing a change of medical outlets.
01:01:05
Speaker
There's like an additional source of revenue for anyone with a retail presence, like who has a large rural retail presence, they can take this up as an additional source of revenue. Yeah, or there are credit societies who do it as an additional business. And for this, you have to tie up with one bank or again, is there like a centralized license banking correspondent? No, it's multiple banks you can type. Okay.
01:01:35
Speaker
So how many banks have you tied up with for your correspondence business? We are doing it only with one bank right now for a particular set of customers.
01:01:48
Speaker
Got it. There were a couple of more questions I wanted to ask on NPCI. I wanted to understand, like you told me, the thought behind the RUPE system. What was the thought behind UPI and how did that come about?
01:02:08
Speaker
It was a natural evolution where now that it's like once you get used to like how you got used to a basic smartphone, then you wanted apps on the smartphone and then you wanted a camera on the smartphone and you want a video on the smartphone and you want to be a player on the smartphone. So it is natural for you know that after you have a debit card, can you have a mobile based app?
01:02:38
Speaker
to do transactions then naturally can you use that mobile banking app to do person to person fund transfer and can you also use it to pay for in the shop buy carrier debit card so that that kind of innovation was bound to happen so UPI was obviously in that thing the
01:03:03
Speaker
best possible thing and NPCI went a step further that why have only banks run apps why not allow a private place like Google and you know ATM also they would also have been a like a profit motive for banks like to support UPI like did it reduce their transaction costs
01:03:29
Speaker
No, it is a new set of transactions that got opened. If a percent-to-percent transfer, you had to know the bank account of that other person. Here you can just get his virtual private address and transfer the funds. So it was convenience, ease of use, and with WhatsApp being there everywhere. Facebook, WhatsApp. Because of that, smartphones were there everywhere.
01:03:59
Speaker
So the app culture has started, you know, for a product like you get, first the app culture has to come. Okay. And Beam is by NPCI or like? That's a, that's their own app of the government. Like you have Google Pay, PTM, there's Beam app. So, but Beam is not like a government app, it's an NPCI app.
01:04:28
Speaker
I'm not sure who owns it. It would be the government also. It was the representative of what's to come. So then the other private place would see it and say, oh, we can also develop. Or banks could. So it was like Google's Google had that line of phones, Nexus, where the goal was just to show hardware companies on what they could do with Google Android.
01:04:57
Speaker
I'm not sure. I think they bought Motorola with a different purpose. And what is Bharat Bilbe system, if you can talk about that? Like you're saying it's the next big disruption. So what is it exactly? It's like all billers in India are available under one roof.
01:05:20
Speaker
Like our national financial switch, all ATM got connected to one single thing. Similarly, all billers in India, all electricity board companies, all telecom companies, all your DTH, everything is under that one. So once you are, say, a bank interest, a Bharat bill payment,
01:05:37
Speaker
their customers can pay bill of anything. The identification happens like if I pay my electricity bill, how will the electricity company know who I am? Is there an Adhar based identification? No, no. We actually pay in real time. So consumer ID you have to give.
01:06:00
Speaker
Okay. So then you need to remember consumer ID of all of these. Exactly. For example, you go to a biller's outlet, you go to electricity board outlet to give your consumer ID anyway. You pay for yourself or your friend, it doesn't matter to them. As long as you're paying for a certain consumer ID. Water is appending when you pay. So that makes sense.
01:06:28
Speaker
Only it's a combination of all billers under one. So if you are staying in Kerala and you are shifted from UP there and you have to pay bill of your residence in UP of electricity board, you can pay in Kerala. You don't have to transfer money to somebody relative and ask him to go to UP state electricity board and pay there.
01:07:00
Speaker
the connection was lost. Okay. Okay. So right now also you can pay online, right? Like most of these electricity companies have a system to pay online and even bank apps like through the ICICI bank app I can pay. So this is just like an aggregate. When you pay online, when you pay on ICICI today to their bill payment system, we'll see the Bharat bill pay logo there.
01:07:31
Speaker
So the platform behind is Bharatville. So you can see a BBPS. And is this also bringing online companies who are not... Earlier I say I would need to type in many billers, for example. Instead of now they come to Bharatville, not all billers are there.
01:07:55
Speaker
Okay. Okay. Okay. So this is again that same, uh, Rupe or not, not even Rupe, but it's like that, uh, the, the first thing which NPCI did of debit card is interoperability.
01:08:19
Speaker
And this again, how would Sarvatru benefit from Billpay, the Bharat Billpay system? Again, our job is to create platforms and give it to banks. So most of the corporate banks want a bill payment system to give to their customers in their mobile apps, on their branches or on their website. So then they use our bill payment platform and they can do it.
01:08:47
Speaker
And this would reach the cooperative bank through your partnership with the software companies who provide them the core banking solution. Not necessarily because this goes directly into the mobile banking app.
01:09:05
Speaker
Okay. And so, you know, what is the road ahead for Sarvatra? Like are you planning additional fundraise? You know, what next? So, I would say already there are a huge number of platforms we are given to the banks, but still there is only hardly
01:09:31
Speaker
10% of their customers were actually using some platform or the other. And out of the rural customers, only probably 20% of them have a bank account. So actually we are not even scratch the surface. So first is to try to get all customers of the bank to use the digital platform that we are given.
01:09:55
Speaker
And then that catchment area around the branch make all those who are not on any of the, who are not customers of the bank to try to make them customers of the bank by giving them products that appeal to them along with the banks. So that itself is a lifetime job.
01:10:16
Speaker
So essentially you're saying there's a large unbanked population and there is a large population of people who have a bank account but are not using it digitally properly. Correct. So there was two things. There was unbanked population and there was underbanked population. Underbanked is having a banked account but no facilities. So we defined financial inclusion as making the underbanked bank.
01:10:42
Speaker
Like example, if a customer of a ICICI bank in Nariman Point, what all the services he can avail because he's a customer of ICICI bank? Same service I wanted to give to a customer of a rural bank. So all the services available at his doorstep, at his affordability, at his level of connectivity, at the level of infrastructure available,
01:11:10
Speaker
That's the goal of Sarvatra. That's why the name Sarvatra anywhere. Why we call us Sarvatra is because of that. We want to make digital and banking available everywhere. So are you planning to acquire also some companies to increase their product portfolio and what all you are offering to your banks? Like acquisition as a way to...
01:11:38
Speaker
No, because culturally it has to mad because most of my people are with me for many many years and they're dedicated to the country and you know if I don't culturally have it will happen you know or it's an extremely high level of technology we use you know cutting-edge, bleeding-edge technology so
01:12:02
Speaker
We rather grow. Wouldn't it make sense for you to also get into core banking because then you become a full stack service provider? We launched our own core banking. We always had a core banking, but we never paid attention to that. But now the demand came from our clients that they want a web-based core banking.
01:12:21
Speaker
And that's when we realized that there was no good web-based core banking. So with our expertise of platform as a service thing, we created one of the finest web-based CBS now, and we are piloting it in 10 days. And then we'll expand across the country as required. And we have partnered with Oracle Cloud for that.
01:12:47
Speaker
So record cloud is giving our CBS to some of the customers, but we are also going to expand into our own private cloud also, which is based on, again, our record technologies.
01:13:08
Speaker
So we have expanded. CVS tools can be run only on Windows machines. You need to download and install a software to run it. You can't just open a browser window and log in. You can. There are lots of, what you can say, CVS, which are web-based CVS. So web-based CVS are there, but we are a cloud-based CVS.
01:13:32
Speaker
So we are the first cloud CBS. But web-based CBS necessarily be cloud-based? No, no, no. See, web-based CBS means what? The data center is within the bank. And through browsers, all branches connect to that. Cloud is every browser is connecting directly to the centralized system, to the cloud.
01:13:58
Speaker
So example, your office mail is a web-based mail, but your Gmail cloud-based mail. Okay. So in a cloud-based CBS, then the bank doesn't need to have servers and maintain the databases that is maintained on the cloud by you. Correct.
01:14:20
Speaker
Okay, so it is even more convenient for a non-tech savvy bank to become digitized. Or more than non-tech savvy, it is also always on infrastructure. In COVID, the banks realized that in this COVID lockdown, branches were shut, head offices were shut, people couldn't reach the branch. But their system is always on because it comes with Sarvatra.
01:14:49
Speaker
It was never downtime. So there's CBS, for CBS they had to go there, do a, then you know, somewhere somebody had to go to the head office or all that. So cloud, a huge demand for cloud now, cloud CBS. Like you, you know how we are now.
01:15:10
Speaker
using. So all my interviews no longer happen in person, now it's all online. And you're using some cloud to talk to them. Yes, yes, yes, yes. All recordings, music recording, I'm an artist, musician myself. So I just recorded my album in the last two years of lockdown. We did it all online. What kind of music do you do?
01:15:36
Speaker
I used to do pop music, rock music. But this first time I tried Marathi Suga Musangit. So I did that. And your company is based in Pune only? Yeah.
01:15:57
Speaker
So nowadays, I don't know if my company is based in Pune, I think it's based at home. Because all my employees are across India, and many of them, 30% come from rural background, they're happily staying in rural areas. So I wouldn't say we are based in Pune, we are headquartered in Pune. You are a cloud company now, so to say. Your office is on the cloud.
01:16:27
Speaker
Correct. We are a cloud company. So do you think that will be permanent or do you think once covid subsides, you would ask people to come back to office? So now I have asked people to come, but none of them are really interested in coming to office. They're so happy at home. But we have given them options. So I think most probably our office will become like a
01:16:55
Speaker
place, well, co-working space where if someone wants to go to the office, they have to book and come. That's what only probably management people will come and go and sales guys anyway are always on the road. So, so I don't know. So, you know, a lot of entrepreneurs feel that they need people to be in the office to make them productive. How do you manage to make people productive without calling them to office?
01:17:25
Speaker
If you do quality work, you don't have to be productive. You don't have to give them work and make them work. If your work is of good quality, they will work. And you have to trust them. It should be really something that excites them, then only they'll work. Otherwise, better they work only for us and they're doing bad software.
01:17:49
Speaker
Okay. So you're saying because of the fact that you chose to be a product company, not get into services, therefore your people are more excited to work and you don't need to really... No, we are a services company also, but we have services around our own product. So we create products and then we run a platform as a service. So if you see our revenue is all service based.
01:18:14
Speaker
We are no longer selling product, we are giving service around our own product. Yeah, you are transaction based. Yeah, correct. 70% employees are in the service side of the business. We are not doing so in this product. So, we are a services company.
01:18:33
Speaker
But we do something really good, something exciting. We have the mission of doing, digitalizing the country. And we are happy with what we do. This episode of Founder Thesis Podcast is brought to you by Long Haul Ventures. Long Haul Ventures is the long haul partner for founders and startups that are building for the long haul. More about them is at www.longhaulventures.com.