The number of retail grocery retailers across India in 2022 amounted to about 13 million.

Grocery retail account for about 65% of India’s overall retailers. And the most common problems faced by these retailers on a financial front up until a few years back were –

1. Accepting digital payments such as UPI or Cards
2. Easy & Quick access to loans for expanding business or in the form of working capital for buying new stock.

In 2018, BharatPe was started to cater to these problems faced by every day retailers in India. Since then the company has grown to enable 10 million merchants in 400+ cities, processing US$ 20 bn of annualized TPV in payments. During the peak of Covid, they also joined hands with ICICI Lombard to launch Coronavirus insurance cover for shopkeepers. To enable hands-free checking of transactions they also launched Speaker.

To know how digital payments turned out as a big break for them, we’ve got BharatPe founder Shashvat Nakrani & CEO Suhail Sameer on our guest seats this time.

In this episode we discuss-

• How they’ve scaled BharatPe over the past 4 years?
• Does the age gap between them affect the decision-making at the top level?
• What do they keep in mind while building or scaling any new product?
• And much more

Notes –

01:35 – Expectations with BharatPe’s current scale

03:17 – Joining a Rocket Ship as a CEO

05:10 – Changes in culture and customer offerings in the last 2 years

12:19 – Very less attachment to a particular role amongst founders & CEOs

16:30 – Dealing and coming out the challenging times at BharatPe

18:17 – Zoho Sponsored – Prashant Ganti on Where do founders struggle with Payroll and how can they fix it?

19:33 – Helping the team innovate faster and plan Go-To-Market strategy

25:37 – Strengths & Weakness of Shashvat

29:33 – Strengths & Weakness of Suhail

31:03 – Handling the firing decisions

35:17 – What are the things they bond over?

36:38 – Processes v/s Hustle in 0 to 1 and 1 to 10 journey

40:49 – Secret recipe behind success at 0 to 1 on a product-level

44:02 – Idea behind building distribution network

47:33 – Suhail’s top priorities while joining BharatPe

49:29 – Biases and things Suhail had to unlearn

55:21 – Listening to Younger v/s Older Team members while decision making

58:39 – Next Chapter of BharatPe

01:01:00 – What is being IPO-ready?

01:07:39 – Things which they could have explored outside of Fintech?

Read the full transcript here:

Suhail 0:00

It’s important in these conversations to realize the difference in operating style or nature or decision making process versus fundamental flaw with the person because we are so generalist that we think we don’t know anything and if we could learn it then anyone can learn it. But it was what your age is, I was 22 then and he said my experience is 25 years.

 

Siddhartha 0:26

Hi, I’m Siddharthat Ahluwalia, your host and founder of 100X Entrepreneur podcast. I have today with me, Suhail Sameer, CEO of BharatPe and Shashvat Nakrani, founder BharatPe. Suhail and Shashvat, welcome to the podcast.

 

Suhail 0:37

Thank you.

 

Siddhartha 0:39

Shashvat, it’s been 4 years of BharatPe, I think you have become one of the largest payment players across India. You process payment of $20 billion GMP. 1 Crore merchants use BharatPe what a phenomenal scale, it doesn’t seem like it was built in just 4 years. When you formed it, did you think it’ll reach this scale in 4 years?

 

Shashvat 1:01

We obviously didn’t think of the scale. But it was clear that whenever we launch anything, it should be something unique which is not there in the market. So when we launched the QR code, it was India’s first interoperable zero MDR QR code, because of that proposition itself it skilled beyond our expectations, when we launched our loan product, lending product, it was India’s first EDI product, which again was a very convenient, very new to merchants, when we launched our investment product, it gave returns to the tune of, 10-12%. So, again, all these products that got posted when we launched, it was India’s first credit on QR code. So that has been the core philosophy. And I think we will stick to that, in future also that whenever we will launch, either we are disrupting the market with something unique underlying proposition or will not do it. So there have been lots of pilots for products which didn’t do well. So we killed it. .

 

Siddhartha 1:59

Suhail, when you joined BharatPe two years ago, did you know you’re joining a rocket ship?

 

Suhail 2:05

Yes I knew, I think what Shashvat and the team had built was just about, started revenue side of the business. But I think it was very clear that what they had done on the QR side was very disruptive and unique. It’s like when you start the proposition or start the business, knowing that you will not make money on payments and have not designed it to make money on payments. The strategy on where money will be made, has to be clear. So I think I like a lot of other businesses, which were launched much earlier and therefore go through different thoughts. I think the core premise at that time was money will be made on payments.

 

So I think BharatPe started at the right time, from a point of view of markets starting to realize there is no money in payments, and therefore the proposition was very clear on lending. And given that we come from an FMCG background, our biggest struggle in FMCG used to be that the retailer has only this much money and therefore this is normally the amount of product he can buy. And if you’re trying to solve that, from a retailer point of view, any incremental capital is what he can make 15% or fortnight, 15% margin per cycle. And that’s the proposition with pay . And therefore it was very clear to at least me that in every business execution risk is there. If we don’t execute if our products are not liked by the market, but from a proposition where they had landed by the time I joined, it was really good. It’s massively scalable.

 

Siddhartha 3:30

And since you’ve joined, how has BharatPe changed, team wise, culture wise. And as a positioning.

 

Suhail 3:38

The business has massively scaled, and I have little contribution in that, and rest are all probably contextual. COVID, horrible for the world, but great for digital payments. When I joined we used to do 50 crores of transactions a day, which was a meaningful scale. I didn’t do anything, COVID ended and it itself became 100. So sometimes you have to also be the place, time when business starts scaling that fast. That naturally means something has changed in the company. A lot more people start believing, a lot more of your product starts making sense. If you are helping NBFC partners underwrite merchants on the back of payments, suddenly the payment volume begins to accelerate. So a lot more merchants became lendable. And that sort of builds a natural connection in the company, whether it’s from an investor’s point of view, whether it is from the team point of view, or whether it’s from the industry participants, but I think a lot of the change is actually driven to that.

 

So then the second thing, which I would probably give a bit more credit to myself then this market dynamic is when the team started this the only piece of the puzzle which was missing was the mindset of the retailer, and anyone who comes from FMCG, again this is a contextual that I have a background in FMCG. I think that sort of closes the loop in terms of sort of capability. I think me sort of understanding the consumer or the retailer, in this case, it basically helped us sort of close the full loop and therefore, launch a lot more products, which were probably directly helped us jointly kill a lot more products sooner saying this will not work in this context. And then I think that also in a way was the start of the transition of becoming sort of more professional .

 

But that is a joint work. It’s not many here, every company starts as a founder driven company. And it helps the company very quickly make decisions very quickly to move on, at some stage to do that transition. So my joining BharatPe, incidentally was around the time when we started making that transition and sort of in between Sashvat me and the rest of the team, I think we manage that reasonably well. Now we have a really hardcore hard hitting sort of professional team in place, and that comes with its own set of advantages, especially at scale.

 

Siddhartha 6:00

But in most of the companies it happens after a minimum 5-10 years, BharatPe did this journey very fast.

 

Shashvat 6:08

So I’ll tell you, the scale has also been very early. How many companies have you seen which scaled this much, especially in FinTech within this amount of time? I’ll not take credit for everything. Basically, there are lots of external factors as well. UPI coming into picture. We were early realizing that you came in the future and therefore started building on top of it. But we grew along with UPI. UPI has been in two to three four cities, in villages in geo coming in giving Internet access with Demonetization with the COVID doing contactless payments. So all of that has helped in this game. But whatever it is, the scale has been so fast that we had to adapt to it, we had to catch up to it and we’re still catching up. I’ll be really honest, we’ll never be done with catching up in this space is what we believe. But yeah, we at the founding team in the founders, were realizing that it is now time to go into professional setup, and we started building the CXO level.

 

Siddhartha 7:07

So you’re 23-24 right now?

 

Shashvat 7:09

I’m 24.

 

Siddhartha 7:10

24, and you’re 38. So when You joined, you were 36 and you were 21? So I would say, dynamics would have been like, founders trying to say that take this much control, but at least let me have this much.

 

Suhail 7:26

To be honest, no, I think one thing which we’ve always done well is we’ve never got into control. So whoever is potentially better suited to handle that, handles it, whoever has bandwidth at that point of time handles it, and whoever raises their hand game either left or right. So and that’s how I think you do as founders and like, I’m counting myself as sort of the whatever the core team, I think if your business is growing this fast you’ve to be fungible in the roles you play, you can’t operate like, I’ll only watch marketing because I know it. And that’s the job for the next level of team to be really good at what they are doing.

 

But the top two, three folks who are sort of, whose job is to steer the company in the right direction, can’t take a very narrow view of the role because the market evolves so fast, and the business grows so fast. What is relevant today will probably not be relevant six months down the line. And that’s, and hopefully now we’re at a scale where things will take longer and wait. But at least the time I joined we were just about getting $2-3 million a year type revenue very, very early days. At that stage, every three months, we had to regroup on what we’re doing and whether it is or is wrong, and therefore any single person saying that I will always do this is detrimental for business because you will have five other things running at any point on average.

 

So I think we’ve created that flexibility, fungibility, trusting each other’s decision that okay, if shashvat has seen this then I don’t need to look at it. And I think one thing which will also, I’m giving you being an entrepreneur is realize that there is no such thing as a right or a wrong decision. You get to know this in two months if it’s a good decision or not. And I think one thing which Shashvat talked about, we’re consciously being good at is things which are not working tactically. Mistakes will keep happening. We’re used to launching first of a kind products so not all of them will fly.

 

Siddhartha 9:27

So one thing that I can notice is, very less attachment to either roles in the team or to what you have built. I mean I’m a founder, and a founder starts loving his product, they start linking their identity with it.

 

Shashvat 9:38

Put it in a different way. So now in a professional setup, the CXOs and the department heads, they may be specialists in their role. That is fine, but we’re talking about amongst us, the founders and founding team. We are more of a generalist kind of all we do. Sometimes we look at this and sometimes we look at that, it gives you a fresh perspective on things that someone looks at it one way someone else looks at it another way and it keeps the excitement alive and you’re right we have been consciously not emotionally attached to any business line or any product rather than we focus on solving for business what is right for the company so that kind of maturity you can say is there from early days.

 

Nansi 10:16

Hi, everyone. Before we begin, I would like to share that this podcast is brought to you by Prime Venture partners, an early stage VC fund led by Amit Somani, Shripati Acharya and Sanjay Swami. Prime is often the first institutional investor in category defining tech startups in FinTech, SaaS healthcare and education, such as Markit Quizzes, Planet Spark, Bolt and Glip to know more about Prime visit https://primevp.in/

 

Siddhartha 10:47

So Suhail, you have been part of McKinsey and there you are taught to not emotionally attach to the problem, but just be a problem solver, so how much did that thing help? Because it was Scaling so fast when you joined, valuation was 50 million approximately today it’s $3 billion almost 6 times, there are only very few FinTech companies who are valued at or above $3 billion in India.

 

Suhail 11:09

I think McKinsey is a very, I don’t even know half the time it feels like it doesn’t help at all. To be honest, I think it is unfair, I think McKinsey teaches you a lot on how to handle pressure and teaches you a lot around how to sort of make the best of whatever limited you know. Mckinsey teams typically do three months projects. So you will never be in a place where you know more than the client yourself. I think being the ability, sort of having the ability to work with limited understanding of the space and with limited data and yet sort of take decisions is a soft skill, you’ve sort of subconsciously learned. So it’s very difficult for me to put my finger on something like McKinsey taught me this and therefore I am sort of where I am. But there is so much of McKinsey in my natural behavior, no matter how much I sort of disassociate with it, it sort of comes through, like how we handle teams. No one is reporting to you and if you’re not good then they won’t work with you after 3 months.

 

So some of this naturally sort of helps in the business, especially in a fast growing high pressure setup. I don’t think we get disappointed the month we can go less than 10%, even at this scale. So that pressure is bound to be there. I think hopefully, that experience at McKinsey helped me handle that better. And hopefully some of that translates to the team. But to be honest, it’s very difficult. In McKinsey you learn decision making but not how to follow it on. And I think that was my biggest disconnect at McKinsey. And that’s what I probably learned in my consumer journey, because that is also zero to one, not our own capital or not capital raised by us, but in a very similar set. So I think that taught me probably a lot more and a lot of credit. I always give to Sanjeev for giving me the opportunity, you launch, consumers didn’t used to come but you launch. And I think that sort of really sort of stint I give most credit to.

 

Siddhartha 13:15

There were a few tough times at BharatPe and today you have come out with flying colors but how did you feel at that time? Was it really hard, especially on both of you? And what sort of face did you want to show the team?

 

Shashvat 13:29

It was fairly easy. The process took its own course and we were not involved in the process. It was driven by board and external folks who are interested. So yeah, I think it was business as usual as well. And the numbers were growing anyway. It’s not like the team was not working. But yeah, there were a lot of one on ones with the team, there were a lot of all hands on deck to sort of keep them apprised of how things are changing.

 

Suhail 13:56

And I think all of this weighs you down, and the business is not growing. I think the beauty of our tech first businesses, even if like Shashvat and I are not around for three months, what we have to launch in the long term next, that may sort of get hampered, but existing business will keep on running . And as you kept on growing 10% month on month through the chaos, actually at some points faster. It auto builds conviction and rebuilds conviction, whether within the team or with sort of our investors and the external world, to be honest, as Shashvat said, the process could take six months or take maybe 10% of our time, but the rest of it was business as usual for us.

 

Siddhartha 14:41

Suhail, this Innovation DNA in BharatPe, every six months, you’re launching one product but nobody knows how many failed products are there behind all this. But I think if you look at that, how do you as a CEO come into this picture of innovation again, just helping the team innovate faster and faster and taking it to market faster?

 

Suhail 14:57

I think it is two, three things and certainly only true for me, it’s equally true for Shashvat and some of our leadership team, innovation can’t be driven by any one person. And innovation is a natural process, which comes through you spending time in the market, figuring out what is happening, you sort of reading probably tonnes and saying what are the markets going through which and sort of similar trajectory and innovation sometimes comes from stupid conversations on a coffee table on what is working or not working in a product, I think part of my job is to basically back some of those. My job is to basically say this innovation, I support this innovation. I don’t, because it’s, let’s say, a distraction on the bandwidth we have on tech, it may be a distraction on the capital we have, or I fundamentally don’t believe it will scale. But again, that’s the conversation process.

 

And I think the general mindset is to let innovation happen, and not say no to new ideas until they are a significant drain on either capital or people. Because we always take a lot of pride in it, we still operate as a very lean company. Most people that are size, we’ll have a team of 600-2,000 people, full company 600 people, and this includes a heavy field on the street nature of our business . So therefore, if it is not going to cost us a lot of people time, or it is not going to cost us a lot of capital, which is obviously always to be protected. There is no harm to people letting experiments run.

 

So the only thing you come up with the idea which you believe in, you have to say I will get it done. And if the capital requirement and people requirements are less, why not try it? You’ll get three months, I think when you operate with that mindset, teams also become actually a lot more thoughtful about each other rather than their own, like, at least at least me and Shashvat with or not wedded to individual products. Once you let sort of the wider team say to the watch, I like to cap if you believe in it, I will support it. They’re also the first ones to come back and second to each other. And that’s sort of the DNA we operated, . So at any point of time, there will be experiments running in the company. Gray also likes That’s not That’s never stopped. And I don’t think that should stop for the foreseeable future.

 

Siddhartha 17:21

What are the few things that you and Shahashua disagree on and many times it happens such taking a method it has been about three understanding it was to

 

Shashvat 17:28

Calling out things would be very difficult. But in scenarios key, lots of things key, we don’t even need to discuss the knot. We are on the same page. But in some scenarios we debate the pros and cons. It is fairly objective and fairly simple. But the one thing we make sure is when we go out of the room, we are on the same page.

 

Siddhartha 17:47

You disagree and commit?

 

Suhail 17:49

companies are run even the board processes and the board you may not agree with everything the board sales but at the end of it, you all do your best make your point and basically whatever the significant majority believes then you basically say we will get it done to the best of our ability, I think at one level as the senior team you to operate in the same way? For you may have the board to manage so and therefore, it has to follow a natural decision making process. There are some things which Shashvat will always be better than me at so he’s looking at them, I don’t need to and vice versa. And then there are always things which are, and these are typically things which will require heavy capital heavy manpower deployment like me and Mr. Don t tech engineers required for next three months.

 

So those are the conversations, we will sort of debate and we’ll whatever best we know. And sometimes it’s still a guy call, and then you take that red call. But I don’t think on a general basis, there is a lot which we would disagree on. I think what happens is when you have everything at stake for at least both of us you trust each other on intent, that?I would like to trust that sachets will do everything for better or worse and you probably trust in the same way. And then you also know he could sell you new data let me know what do you make of it and how do you execute it determines a lot more so, in many cases, where one of us may not necessarily be fully aligned also what the other person has huge conviction ah Alagiah to come around, I think my decision can be better than anyone else and vice versa . So, I think therefore, we found a way of quickly debating and moving on with a decision and then both of us will support each other.

 

Shashvat 19:35

I think it becomes easy as long as alignment and overall objective allows you to solve our business not for any personal or emotional attachment to any product or anything that should be easy to process.

 

siddhartha 19:47

Coming onto a personal site and asking you for him and him for you. Let me do role reversal. What are the strengths and weaknesses of Shashvat?

 

Suhail 19:56

I think lots of strength, Okay, nobody has math close to me okay. If you do get a calculator, he will be slower than me. I think Sashavat also has a very good ability to do a lot of 0, 0 to one scene like, handle at least, the swipe launch, we knew nothing about credit card, debit card acceptance. At that point of time, we just know how many experiments you are running on commercial models, everything else, to be able to sort of scale that while sort of continuing to experiment and evolve your model is, I think, a skill which very few people have, I generally believe, generalists. And younger folks have that skill a lot more, because there’s a lot less baggage of what I know. ? And Shashvat does that very often, movies do that really well. It’s also a lot more mature, I can remember to string but

 

Siddhartha 20:48

Lot of less partying

 

Shashwat 20:50

related to maturity.

 

Suhail 20:52

To be honest, I think maturity is knowing when to switch it up. And of course, I think the only thing I would sort of say as a weakness is that Shashvat by design is a bit introverted. And that’s a character trait. Most people don’t believe that I’m an extreme introvert. But most people laugh.

 

Siddhartha 21:17

doesn’t look like.

 

Suhail 21:18

Yeah, it doesn’t look like it but because it’s learned by job requires me to talk to people, it’s energy drain consultancy meetings, it forces you to talk to tons of people and people who are close to me now will notice it because even if i want to know the direction, I’ll ask the other person to ask. Not because I can’t go but it just drains energy out of me. I think for me, that’s a learned behavior. And I think Sashvat is sort of going through that journey. Because I think just his natural reaction is okay, I’ll think it out, I’ll solve it. Or if he doesn’t like anything he’ll say it works. So I think that’s something which, of course, over time, he will become better and better at but apart from that, I think he’s sort of a brilliant person to work with.

 

Siddhartha 22:07

Shashvat same question, what are his strengths and weaknesses.

 

Shashvat 22:10

Strengths are of course too many, as he has experienced a lot, in the general street that we’re talking about is like he’s been into b2c, he’s been into d2c when he came into FinTech we didn’t know tech and then adapted to. So I would say adoptibility is one of those things. Again, analytical mindset, analyzes things quite well. What data should we look at and make decisions ,that is great. Public speaking is obviously as you say, but it drains him. But he has become a natural speaker, I would say and not many, but this is just a few I can’t remember now. And Weakness, I would just say, he is too good nature wise, natural conversations or to take tough calls sometimes. So that is something I think. And I also realized this.

 

Suhail 23:07

That’s also the nature of introverted people. Introverted people by definition, hate confrontation, and that’s my own.

 

Shashvat 23:14

So whenever he wants to confront us, he we’ll try to do it on WhatsApp or in a chat. And when you meet him in person you do not see, even an iota of conflict on the face.

 

Siddhartha 23:26

Dear listeners. Before we dive further into the podcast, I would like to welcome Prashant Kunti, Head of Product Management at Zoho payroll and Zoho books. Prashant, where do founders usually struggle with payroll and how do they fix it?

 

Prashant 23: 41

Thanks Siddhartha. Founders want to give their best for their employees. And they realized very early on. Payroll and compensation is a very, very important part of what they are going to handle. However, what we have seen is where they miss out is usually on finding out the best solution that can grow along with that business. And that’s where, for example, the payroll complexity can grow very quickly. Initially, when you have just a few, four or five employees, that’s okay. But when the employee size count keeps on the payroll complexity grows by leaps and bounds. So it’s best for founders to invest in the payroll automated solutions right at the very start, so they have one less thing to worry about.

 

Siddhartha 24:32

Thank you, Prashant. Dear listeners, you will find more about Zoho payroll in the show notes. Now let’s further continue with the podcast.

 

So what have been some processes, because zero to one when run or zero to 10 this case is mostly when founders run it is pure hustle, pure energy. And then when a professional CEO comes in, they try to bring in more processes. So did you choose the processes or you also became a part of the hustle?

 

Suhail 25:04

I’m hustling only, I was talking to someone, a very interesting conversation between zero to one people are different, ten to hundred different. I’ve realized, like maybe zero to one, one to ten, I can’t do 10-200. But at one level, we’ve learned multiple things. I think every skill is learnable, as long as you sort out 10 to one will also be done. So I’m not by definition, very high on processes, there are processes needed to help business move faster towards the end goal . At some stage, they will slow you down. But as long as you’re not doing this exact path, but are still going straight, it still can mean a faster outcome. I think at least I have thought about this, if it is processed, it should simplify someone’s life and not complicate it.

 

So I think a few of the processes we implemented over the last couple of years are only around for example, budgeting reviews, how decisions are made, like how procurement is done, for example, because there is lots of value, their process has to either systematically add value or has to make you faster if it is neither of the two, at least, I have no respect for that process. . And therefore, I think we moved a fair bit in the last two years. But I think by and large, every process we’ve implemented, may have slowed us down slightly. But I would say we are still operating probably at 80 to 90%, of what we were probably two years back in terms of speed to market and action, but have just managed to ensure that the misfires we have along the way become less than necessary . So that’s the intent of the process, I don’t think we want another extreme, at some more sort of established or some more people who run large companies would have one over a period of time.

 

Shashvat 26:54

So then processes come into picture with corporate governance being the priority for us and preparing for, hopefully the public IPO to deal with the picture. But it’s the art of balancing between processes and speed of execution, because you don’t want to let go of the growth or the execution speed as well. Also, processes might help structurally, taking on some new agenda. Let’s say we want to try these into our decision making only after looking at data or certain analysts that have the processes of including data view folks when a decision is made. So those kinds of things will help the business at the same time, you should not slow down the business. That is I think it’s the art of balancing the both but we are sailing through that.

 

Suhail 27:41

And the core DNA of the company has always been innovation and speed to market. Anything you do can’t come at a significant cost to that . And I think that’s something which we are very conscious about, anything which makes your decision better, anything which makes your innovation sort of more successful, anything which ensures that you spend less money testing out your innovations, we’re all sort of very well coming off beyond that we sort of try to manage process setup.

 

Siddhartha 28:08

So for founders, for many of them Zero to One, they get the timing extremely right. Many are like one hit wonders but in BharatPe’s case you’ve continuously nailed zero to one, so what are your thoughts on that like why do you nail zero to one so well. If founders get to know this, this is the recipe for success, VCs will give it to the founders.

 

Shashvat 28:30

I think it’s not zero to one in our case, zero to one is not attached with the company, it is attached with a particular product. So if there is a product launch, it’s still zero to one. But I think I answered first that whenever we launch, we are very cognizant of the fact key. Why should this work we play the devil’s advocate ourselves, why will someone take this, why will this work, there has to be a disruptor it has to be a first of its kind. Maybe it’s the same thing, credit loan is the same thing, but some caveats will improve your user experience. Daily installments, there’s a huge difference for a particular merchant if the installment is deducted daily.

 

So, those things we try to think over and one of the things that helps is we visit a lot of merchants also we talk to them we go to call center and take feedback from that what is coming from merchants , it will be surprising that the lot many feedbacks come from call centers where people call inbound that, you should do this, you should do that it will be helpful to us, and a lot of those things are failed as well. But the thing is that is a source of sort of getting insight on what we should do next?

 

Suhail 29:38

And to be honest, I don’t think we do zero to one better than anyone else. We do a lot more zero to one and we kill a lot more zero to ones very quickly. I think companies that are multi product companies like ours, if they struggle one zero to one, it is a function of them getting married to the product idea too much. Like, in our type of businesses for tech if it is a good product in three months, it will get a million users. And again, I’m saying broadly that actually every product has its own journey.

 

I think the core focus or the core where we get it right, in my view, is getting very quickly things which are not working, and then doubling down on what is working, zero to an experiment. Like one two is the sort of place I want to build no one I don’t know what is one things which are showing initial promise, we are very quickly able to commit more resources, capital people are bandwidth to it, to really get it from that stage where it’s visible that it will work to where it becomes evident that it worked. Now it’s only worth scaling. I think that journey will go very quickly for products we believe in and products which have given initial signs of success.

 

Siddhartha 30:55

Distribution system of BharatPe is very solid, what is behind that?

 

Shashvat 31:00

I think initially none of us knew how to distribute. So I shifted to Bangalore asn used to keep standing outside PhonePe and Paytm offices asking whoever used to come out about how they’re doing it. So the idea was to, how do we grow the network or the passion to build the network, it was never that the approach is never rocket science. I think the passion, the drive for it, we made processes, we made a rule book once I was done with the launch of one city with the rule book, preserve replicating the waves, and to sort of have the same drive put into your team with the next person and the person next to him contributing to the overall objective that has been I think the hustle and the rigor and the drive has been the key factor for that.

 

Later stage, we started innovating with the app that a person can use to onboard a merchant to sell the different kinds of products. Now I would say our efforts have been that the sweet on sweet app is very robust and very advanced, detects fraud, it helps in cross selling, it recommends which merchant to sell or not and then it helps a lot in productivity as well.

 

Suhail 32:08

Distribution is also driven by a good product, if you launch a good product distribution will happen. When Shashvat and the team launched QR code, it was interoperable or vocally intraoperatively. And zero MDR. It’s an incredible benefit to the merchant. You just have to then explain to them and he will use it . And he will propagate it to 10 Other merchants. Distribution is the effort, hustle, hard work, blood going into it. But no amount of hustle can sell a bad product. And I think, therefore the product thinking is what I will give a lot of credit to, we would have probably got to the same distribution, if we were not as good at executing maybe in six more months, maybe in 12 more months .

 

But I think the original thought on what is different in your product and how would you change the life of someone? How will it sort of prevent a guy who’s using QR code to save 30 whips to like 100 whips he was paying on interchange at that point of time or as MDR at that point of time? And how will your business model still sustain? So that was the real innovation. Once you got that clear, it was a relatively easy sell. And even though today some mistakes happen, MDR has become zero, but to be able to launch that for us to be able to create that impression. Still a lot of merchants or early merchants haven’t dropped off. Because they remember, we were the first ones to offer it free. So there’s a huge value to a great product and getting that is probably 80% of the job done.

 

Shashvat 33:37

Yes, we have never given a product for the sales team to sell where it was not a differentiator, it was the same product as 10 other companies. So we’ve never done that

 

Siddhartha 33:50

So Suhail, when you joined what was your first priority?

 

Suhail 33:54

Hiring. And I think there were three priorities at that time. I think one was my own journey because it was also transitioning from on the run to sort of professional to professional CEO, you’ve to build your own trust with the team. So I think that’s sort of a personal journey. But I think from a business point of view, just about launching and just how launched landing, but was not scale. We were not swiping at that point of time. And then we were hiring at that point of time because I think CSO, CXO level was just starting to get buried, thankfully, sort of shattered books like completely off my plate. And then I could spend a lot more time on the other things.

 

But I think the foremost was sort of to get the team comfortable with the fact that someone external, someone who’s run large companies can come in and sort of ensure that the pace of how we operate doesn’t suffer because of that, and that conviction in the team is what I was spending a lot of at least mindful energy on. A good CEO always brings a solving plan with him. I’ve to do this in the first 100 days, because if you don’t do that, you don’t get second opportunities, third opportunities. And that was my large banner to focus on getting comfortable. That one great product out there. We thankfully got two when Shashvat took over. And since then it has been much simpler.

 

Siddhartha 35:20

What are the things which were your biases and what all you had to unlearn. One could be this which I can think of and I could be completely wrong. 21 year olds are running the company, they might have got the hit with one product. But there’s still things to discover.

 

Suhail 35:34

No, to be honest, no. I don’t think I generally operate from a lot of biases. I think Shashvat was 21 then but I had also become CEO of a company and took it public of someone else’s company. For your company you can argue here, you can start even at 18 or 35, someone gives you their three and a half billion dollar revenue company to run, at 31 is actually a much bigger deal. And I’ve always had mentors who trusted me, when I was probably the youngest person in the room, the most junior person in the room probably knew the distance. In McKinsey your level is set on the very first day.

 

My first client interaction at McKinsey not getting into the client’s name. But like he kicked me out of Marinette, I was 22 then. He said, My experience is 25 years. And that’s always stayed with me. Because by the end of the three months, he was literally doing without thinking whatever I was saying, and therefore I don’t think there is any age to run. I think you need conviction, you need sort of ability to take the risk, you need the hustle. And then you need to figure out what you don’t have and to figure out who else in the team will complement that. So I don’t think I had a bias. Did I have any bias? No, actually, I was pretty sold. Like our conversations with everyone, it seems to suggest that this is a great place.

 

Siddhartha 36:56

Anything that you have unlearned?

 

Siddhartha 36:59

I used to think that I came from a very fast -paced business. So to me it was the fastest route to grow in India. 10% growth, again, is very, very normal, but it’s a progressive growth that you build in distribution, etc. How tech for me, and tech lead growth for me was actually very, very new. I’ve run a services company, BPO, but BPO is not the same. I think how products go from zero to 100 and what do you need to do in terms of being ready, because this type of product doesn’t give you that type of opportunity to course correct. What happens in FMCG, you launch a bad product, 10 people will consume it, you’ll fix the product.

 

Here, if you launch a bad product, it can very quickly sort of erode trust. And I think that something I had to sort of consciously learn 90% right is okay. But unlike my previous sort of roles, where 50% right is okay, to test in the market is a very conscious shift that I had to make. Earlier I used to be like when will this be launched, now I’m like it’s okay we can wait two more weeks but we’ll launch it good. So that’s one big change.

 

And I think the second change is generally working with a lot more younger folks. The FMCG company was younger, but not like this. So suddenly at 38, I think I’m the third oldest person in the top 50 people of the company, and sort of working with younger Folk is sort of very, very different. It’s also different from a point of view of they challenge you a lot more versus in FMCG I would write something on the board and it’ll get done.

 

Siddhartha 38:33

But here you have authority.

 

Suhail 38:36

No I think a because a lot of the younger folks in the team we spend a lot of time with actually see this as their own company, like many of them were like first 10 employees, first 20 employees, okay I’m senior, I’m CEO eventually if I don’t like what they say I will say do this. But you have to understand where they come from. They come from this is their company. And they will like to call out a lot more around this is wrong or this should be done this way. And therefore it takes a bit more sort of change in approach on what you say and how you say it looks okay, what and how will this person understand.

 

Who to pull in sort of to make basically your decision better versus let’s decide and the market will teach you anywhere else of course correct. So I think a couple of those things are very, very different but I think I realize a lot more things are common than they are different. And also you can be a big believer in, do any work but the core remains the same. Ability to problem solve, ability to take market feedback every bit of course correct, ability to hire the best people that doesn’t change depending on where you are.

 

Siddhartha 39:44

Shashvat, this will be good to have your view on how to disagree with the senior who is 15 years older to you. And also not to offend.

 

Shashvat 39:53

So I think the simple answer to that will be the language of business and this is a I think the merchant is saying this, the team is saying this, watch it. So, as long as I said, the alignment on the overall objective is there, I don’t think anyone will be offended over here, because everybody is unlearning, I’m learning, kind of meeting in the middle somewhere with the overall objective. And thankfully, nobody has ever taken it that way . Why are these younger folks coming and saying these points, because generally with the tech and product kind of accompanying the younger folks will be much closer to the audience, much closer to the experience and will raise valid points. So by default, I think we’ve been hearing a lot more younger folks about tech and product.

 

Siddhartha 40:46

What do you do when you switch off from work?

 

Suhail 40:48

Lots of travel, I used to play a lot of sports, I think BharatPe stopped it. Part of the reason was I used to live in Gurgaon. So a lot of times you should be driving on the road already. But I read a fair bit. Again, lower pace, but I still probably read 25 books a year. I don’t watch TV.

 

Siddhartha 41:12

No netflix, nothing?

 

Suhail 41:13

No, I don’t even have a subscription of any. The only subscription I have is Hottstar because Iwatch cricket. I actually stopped watching TV and I was 24-25 And I sleep four to five hours a day. 14-15 hours are spent working but I think I ended up using the rest of the time when I’m not on vacation, planning vacations, reading a lot more. Playing a sport once in a while, I play Squash and I’m learning tennis. There should be something new to learn which now has significant quality and personal life. And then I spend a lot of time socializing with friends, so that’s important for me to unwind.

 

Siddhartha 41:52

And what about you Shashvat?

 

Shashvat 41:53

Again, I watch a lot of movies, TV shows, I travel, I don’t go on trips , socializing with friends, all of the same things. forts. I would like to explore more. I think I’m not doing enough. I would like to play badminton more.

 

Suhail 42:12

I actually want to learn tennis. I’ve watched it all my life and been enamored by the sport.

Siddhartha 42:19

So one is philosophy and others numerically how you think the next chapter of BharatPe, It has reached 3 billion valuation, 10 million merchants have joined, launched good products for them that they are using on a daily basis.

 

Suhail 42:32

First of all, what can we do for merchants, that sort of core. Today also, we have 1 crore Merchants. But we have enabled loans for only five lakhs. I’m sure there’s a lot more of them . And we need to constantly become better at how to decide who can be lied to and who cannot be. So there’s a core business which needs to keep on learning and keep on getting better and better. I think the second part, I remember having this conversation really early in my BharatPe Tenure, that what will merchants pay you for. Our thought at that time used to be that merchants will pay you if you give them credit, of course, because he makes money off it.

 

And the second part used to be that the merchant would tell you to send him customers. Because shopkeepers really struggle from a point of view of acquiring new customers, especially against E-commerce and monitoring ads. I think the first one, we’ve done a good job of it needs to keep evolving. The second one we’ve not really done anything meaningful on and now with our consumer leg of the business will pay back and push where I think we’re placed where we can solve that which and I think that’s sort of at least one big leap of faith we want to take in order to decide what is the time for it is lots of things always in the pipeline.

 

That’s sort of one thing I want to do, I think and then keep doing more of the same. We’re still scratching the surface, new products will keep coming. Some of them will scale, some of them will get killed. But just keep innovating, keep launching new products, figure out how we become more and more helpful to the merchant. If you do that this will sort of take care of itself. I think there is an IPO at some stage to be done. But that’s a reflection of the numbers.

 

Siddhartha 44:19

That’s my next question, when are you thinking, I personally feel that internet businesses going IPO at a $10 billion valuation is a disaster for retail investors. That’s a very personal thought. And why is that because retail investors can’t imagine in India, how they will manage their money with a $10 billion company? 100 billion dollar companies don’t exist in India, Unilever is valued at $70 billion with more than like $10 billion of the overall sales. So the smaller you go IPO, the better. Why not grow with the retailers?

 

Suhail 44:49

Obviously, a lot of retail investors, especially the savvy retail investors, want to come into companies earlier and grow with them, and obviously $10 billion becomes difficult to sort of doubling every year. At the same time I think we should do an IPO when you’re IPO ready.

 

Siddhartha 45:05

And what is that?

 

Suhail 45:06

IPO ready for us. And again, it comes from a lot of learning of external markets. But more recently, Indian markets. To us, it already means the core business is making money. The profit. But, the core business is making profit, because good markets will reward great growth, even at loss. But you’re not building a business for a good market, you’re building a business for sustainability. So it has to be able to go through sort of bad cycles and group cycles. And in bad cycles, everyone comes back to profit, people will not judge a tech business on the amount of profit it makes, because they understand you’re redeploying a lot of that profit back into keeping on growing at that rate.

 

But you sort of prove that you can make money, because a lot of the question on the tech businesses tends to be that great service, but great consumer value proposition, but will they ever make money? It’s a question which probably every tech business asks, but if you can prove that you can do that, I think that sort of to me is IPO ready. And once you’ve proven that, I think it’s a great opportunity for retail investors to come in because they know the sustainability of the company. Unfortunately, for tech businesses that only come at a particular scale, it can’t come too early. And therefore, I will find it incredibly tough to find really good fast growing tech businesses, which are able to IPO at a billion dollars.

 

But for us, we want to be IPO ready. Our intent is to be IPO ready because we don’t believe that short of large scale private equity investors, which can make a $100 billion company, there are only examples of 100 billion dollar companies in India that are all public. And therefore, eventually the public has to be the answer, timing, etc. We’ll figure it out. But right now our thought is one year, 2 year, post 2024 election. I believe the government will be stable. And that’s always good for markets. Again, less worried about timing. More worried, we spent a lot more time thinking about how to get IPO ready. Rest all is a button. So we will not do a public offer before sort of turning green on the p&l.

 

Shashvat 47:28

Also, we don’t have a target valuation in mind, or some values in season four, I think it’s a function of the market at that point of time, and it can eventually anyway, so not not looking at it from that point of view, that we need to be able to give more returns to the investors.

 

Suhail 47:45

Valuations matter when you’re selling. If you’re not selling, valuation doesn’t matter. Once you go to the public market, we’ll get it to the right valuation, whatever they feel is right. So after 6 months it’ll come back to its price so it doesn’t matter at what price it’s launched. As long as you can ensure retail investors don’t lose money or hopefully make reasonable money. It’s a great place because it creates a positive spiral about the stock. So we would consciously err on the side of caution and leave money on the table whenever we do the IPO versus like sort of trying to chase an IPO number.

 

Shashvat 48:30

Even in our private rounds our first term was 20 crore valuation. And last round was 20,000. The amount of returns they’ve made in every round we will consider to evaluate the valuation. Even in the last round, we call the valuation lesser than the term sheet set to just leave money.

 

Suhail 48:49

But valuation doesn’t matter. So maybe we will be less than 10 or maybe we’ll be more, but we will price it in a way that every retail investor feels there is value in it.

 

Siddhartha 49:01

What are some of the things that you feel that if you were not in FinTech, you could do these things too.

 

Suhail 49:07

I’m excited by the newer tech a lot. I’ve also been an early investor in consumer businesses, d2c like, when I did my first investment people would say d2c won’t make it and if it did it’ll be of 100 crore not more than that. Now d2c companies are shuffling, sort of doing 1500 to 2,000% revenue. So and then sort of some of the other consumer tech journeys, that sort of one area I worry about, probably a lot more in. The second place I feel very excited about is unfortunately crypto has spoiled its name.

 

But the blockchain by itself is such a massive technology and what it can do, theoretically, within the FinTech space, it can really change the game on cross border payments. All these companies that will take 100 billion dollars can get disrupted overnight. It’s sort of the economics of the world coming together and sort of make bitcoin based exchange. I think that’s something I’m really excited about and I believe it has use cases and fintech has use cases in consumer tech. I think a lot of folks are launching influencer management fan engagement type stuff on the back of it seems very exciting. I think these two spaces I would have personally gone deeper into, I had a lot of saas, but I don’t know it so I stay away from it.

 

Shashvat 50:23

I think the more of the same, the web three that is coming up. The exciting thing about it is that now, the three party ecosystem all can get converted into direct to party and the element of trust, there is a leap of faith in everything you ordered from Flipkart.

Siddhartha 50:40

Yes, web three doesn’t need a distributor.

 

Shashvat 50:42

Yes, and a factor of trust or the leap of faith, that is a pretty exciting, but very nascent stage, globally. So, I would like to wait it out till the foundations are laid and if I am not here, but I will be working on that.

 

Siddhartha 50:59

Would BharatPe someday launch something on blockchain?

 

Suhail 51:02

We can’t focus on anything else than the next three ideas. Blockchain is not there in the next three ideas but it’s an interesting space, and we do believe that there is applicability in financial services, so I wouldn’t rule it out but nothing is on the card.

 

Shashvat 51:18

Depends on the regulatory stance in India because we would not be comfortable doing it without any direction from India accepting that or not accepting that.

 

Siddhartha 51:30

Thank you so much, it has been such an awesome conversation, one of the best in my life and sitting across two such accomplished founders.

 

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