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Grow the scale, grow the revenue, create value for customers: Kunal Shah’s new mantra


As startup CRED became the newest member of India’s unicorn club, its founder Kunal Shah talks about the growing interest of consumers in digital payments and how CRED has been successful in monetising on the demand generated. Edited excerpts:

Nayantara Rai: Big congratulations to you and the entire team. Yesterday, I was talking to Vidit Aatrey of Meesho, soonicorn and later we saw $2 billion plus valuation, CRED has also pulled out something like this. What is going on, what would you attribute this kind of success to?

Kunal Shah: I wish we had that culture of celebrating this unicorn tag, every time we raise money we have a mindset of accepting a bigger responsibility towards our investors and our stakeholders. It means that we are signing up for much bigger roles than we have achieved so far. What is driving is what COVID did to internet businesses, most of the businesses saw a huge amount of tailwinds because the consumer behaviour and confidence using tech have become very powerful.

We almost doubled our user base in the last seven-eight months. We also saw a lot of traction on our early revenue that we have launched, all those experiments have worked out quite well. This resulted in more and more interest from the investors. We have raised a fraction of the demand that we had and that was the conscious call that we took because we wanted to make sure that we are doing right kind of raise. Every round that we have raised, nearly 70-80% of the round has been done by internal investors which usually is a very strong sign, as every time investors are committing more and more capital means their confidence is going up and that is a good sign for any company. So, very fortunate and with a lot of gratitude to our members that we have reached a scale but a long-long way to go. This is almost like having a meal before climbing the Everest.

Nayantara Rai: You think that you have got your product right and you had got your customers right, is that basically what you are also trying to tell me?

Kunal Shah: We took the contrarian bet of focussing on the affluent customers which has really worked out well for us. It was harder to believe that the company is focussing on a small segment of customers and how will they monetise, how will it scale but the fact that we could focus on the trust worthy cohort and be able to create a community that we can monetise through lot of cross selloff of financial services, payments and so on — has played out well. Although it was a contrarian bet in hindsight, it looks like the right bet to make because the customers propensity to spend or buy is significantly higher in this cohort.

Nayantara Rai: Now that you have raised all of this money, what are the plans going forward?

Kunal Shah: The usual– grow the scale, grow the revenue, create more value for customers, creating from our customers and be more and more ambitious.

Nayantara Rai: As you become more ambitious, as you look to raise more revenues –give us a sneak peek of what the rest of 2021 has?

Kunal Shah: This year, we are going to double down on growth like other years and we are at 22% of credit card bill payments right now, having 35% of premium card members on the platform. The idea is to keep growing our market share on both these metrics and all the revenue streams that we have launched, maybe do a couple of experiments and also focus to build the brand and create value for the customers to build affinity for the brand and so on and so forth. On different dimensions we will do a lot to engage, a lot to grow our user base and revenues.

Nayantara Rai: I believe you have also decided to reward all of your employees. Do you want to share that with the viewers of ET Now?

Kunal Shah: We were the first few companies that had a large exit in Freecharge and lot of our team members are also in CRED. To me, the culture of sharing wealth is probably the best joy a founder can ever have. In Freecharge times, I used to be reluctant in sharing about ESOP because I used to feel that the team earned it, you cannot be taking the credit of that. Now, I think more and more start-ups are openly doing and I feel very-very proud about doing that.

We are doing a 5 million dollar secondary from the team and even last time we had announced a larger amount, very few people wanted to sell, even this time we have announced this, we will see how many will actually sell. The confidence from the team to hold on to the shares is probably the best thing you can ever ask for. While a lot of team members may have reasons to kind of use that money and do something for their family, we are obviously enabling that through the buyback. But the intent is to keep doubling down and stay invested.

Nayantara Rai: Just like Shunwei Capital has exited other start-ups, there has been a bit of buzz that in this large funding round of yours an exit has been provided to your Chinese investors like Hillhouse, etc. Is that indeed the case?

Kunal Shah: Secondary is happening where mostly employees are selling. None of our institutional investors are exiting. They are staying put and we have no such announcements. But the ownership of any Chinese investor in our company is very-very small like maybe a few percentage points. So, we never were a Chinese heavy company to start with.

Nayantara Rai: I want to talk to you about the contrarian view that you took when it comes to targeting the customer base, you decided to go for the premium. Any interesting insights that you have seen in the shopping behaviour since Covid?

Kunal Shah: Many interesting insights, first of all, I think the country is ready to explode on travel and vacations, the pent up demand is going to be huge as soon as we all are vaccinated. While we are going through these lockdowns, it seems a temporary blip and we are all going to get to some version of vaccination completion by this year end. We sell a lot of vacations on our platform, we see interesting traction and people are actually buying a lot of vacations during Covid which is quite interesting in itself.

In D2C brands, we are seeing very-very interesting behaviour, people are exploring new coffee brands and we see people buying thousands of Keto chocolates, these are places where consumers are discovering new products. Consumer segment was ready but the offline brands were not ready so we currently engage with around 1800 brands on D2C and many of them claim that we do as much sales for them like any other horizontal platform.

Nayantara Rai: You are telling us that people are looking at travel, there is so much pent up, they are looking at bookings and are they going ahead with them?

Kunal Shah: A lot of them are open to travel, many of them are taking a trip to Maldives, many local tourism options have taken off in a big way, staycations have become big. We are seeing strong traction although we are a very early player in the vacation space. We are quite happy to see the results.

Nayantara Rai: You have also got that facility payment, utility payment, you can pay rent as well. How great has that business been and has that really been the growth driver for CRED?

Kunal Shah: It is one of the revenue experiments. Rent payments were launched during Covid, we expected that the consumers will like that product because it was harder for them to be able to manage their cash flows as there was a potential job loss situation. We are seeing consumers love the idea of earning rewards while they pay their rent through credit card and that category has done well.

Many people still do not know about it so we are going to make that category bigger as we scale but even the regular CRED Pay that we have launched on merchants is seeing a lot of traction. So overall, many-many innovations done, many industry firsts and very early traction show a lot of positive things and all we need to do is to get more customers or at least from the merchants that we have signed up with or the customers who have started engaging in any of these products, including our lending business, commerce business, payments business, rent business.

Nayantara Rai: We talked about how India has pioneered the digital payment highways–there are six consortiums to bag the new licences, you have got the likes of VISA for example, even backing the likes of BillDesk etc, where do you see all of this headed?

Kunal Shah: We are definitely getting to a place where all the traditional consumer behaviour of using cash or going to banks, ATMs may be a thing of the past. When you remove friction from consumption, it automatically results in growth of consumption and taking off the per capita income. My view is that we are probably like most innovative country, even US is far behind when it comes to payment innovation and all of the steps are in the right direction, more players participating, more innovations coming in is always going to be good. As I always say– wealth is not zero sum, there will be multiple 10, 20, 50 billion dollar companies that will be emerging out of these innovations consistently and I am only happy to see so much action happening on this front.

Nayantara Rai: You started to reward people who make payments on time. As we are in the midst of second wave, have you seen a change in consumer behaviour, do we need to be rewarded to make payments on time, a bad credit score is still not bad news enough?

Kunal Shah: Our intent is very simple, we cannot punish your bad behaviour, we are here to reward good behaviour, good behaviour includes doing good decisions with your money, not just paying your bills on time, paying your bills in full in time ensuring that you are not incurring interest rates that you should not be incurring on not being aware about it and we have a long way to go.

I can tell you with confidence that when we look at financial literacy in our members who are more affluent -we are shocked at the levels of literacy that we have, this topic needs to be talked about a lot more. And I think CRED is going to invest a lot more in general financial literacy. CRED data has shown that if the affluent are clueless about financial literacy, the whole country is in quite a bad shape and we are going to double down on investing and creating financial literacy across the country.

Nayantara Rai: Is that going to be part of a business activity which can be monetised or are you going to do in the larger interest to bolster the ecosystem?

Kunal Shah: Mostly larger interest. We all cannot be in business if consumers are not taken care of. And our responsibility is while we focus as a company on the affluent customers, our responsibilities are towards the whole community and the country. We will always keep taking these initiatives in the larger interest of the community.



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