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In this episode of Banking & Beyond at RBL Bank, catch Harshil Mathur, CEO & Co-Founder, Razorpay in a candid conversation with Rajeev Ahuja, Executive Director, RBL Bank, as he takes us through his entrepreneurial journey. Know, how did he start, his first funding experience, role of Y Combinator in Razorpay’s success, moments when he thought of giving up and who inspires him.


Rajeev Ahuja

We have Harshil Mathur, who is the co – founder of Razorpay, one of the most exciting young companies to have started in India. And some of the origins of Razorpay are very fascinating. We in RBL bank and I personally have the greatest honour and pleasure of working along with them as they have evolved to something very, very, very strategic, scale and important part of the financial services systems. Welcome to power conversations at RBL. Bank. And, you know, look forward to chatting with you.

Harshil Mathur

Thanks, Rajiv. Thanks for inviting me. I look forward for the conversation.

Rajeev Ahuja

Yeah, but maybe until as we normally do, you know, we go back to the origins of how did this all start. And I’m sure you know, people have asked you this question, but I think we all want to understand, and probably weave in with a few other questions along the way, maybe just free flowing, let me know, how did it all start? And I’ll come into payments.

Harshil Mathur

Yep. Yeah, I think I think the journey has been pretty exciting. And we keep looking back to where it all started. So I think, technically, we did start somewhere right around college that so me and Shashank were in IIT Roorkee, and we got to know each other during that time. And we used to be part of this technical group that we had started, where we used to build projects, software projects together. And that’s how we got to learn how to work with each other a lot. We used to spend a lot of time working on projects late at nights. And and I think Shashank was senior to me in college, when he was graduating, he just threw that idea with me that, hey, maybe we should try to do something of our own. He got placed in Microsoft in US. A year later, I got placed in Schlumberger in India, but I think that thoughts lingered with us. And we kept which we stayed in touch, and kept, trying our hands in different things even while we were doing our jobs because we had evenings to ourselves. So we just spent a lot of time building things tinkering with things. I remember like distinctly that was one of the one of those times we were trying to build like a social crowdfunding platform for India. Yeah, it was not a hobby project, it was not a startup startups, startups are building like in our evenings and on weekends. And we’re trying to build a platform through which like, for example, people could raise money for their sick parents or something like that. And while we’re doing that one of the most important important constructs in such a project is payments. So we reached out to a lot of large players who used to do payments at that point of time. And we felt like the digital payments was extremely hard for a startup to get into. And we tried to research a little Why were we getting a bad experience. And what I found was that, this was like 2014. And while, payments, industry digital payments was considered a sorted space, it was still focused very strongly on large businesses. And then the reason for that is most of the payment volume at that point of time used to come from large business, startups were still fairly young. And in the largest startup was of course was Flipkart, a couple of billion dollars, but most of them are fairly young and small compared to that. And nobody cared about startups as a category in the online payment space. This, this, coupled with the fact that it was very difficult to get digital payments acceptance in India most startup started by accepting cash. And that felt a little counterintuitive to us. Because in our belief, the point of digitization, the point of technology, major thing Internet has changed in the last 10 years, is that it has made things democratised, like whether you’re a small guy or a big guy, you can sell online sitting anywhere in any part of the world. Unless you solve for digital payments, that journey is not complete, right? Because even though I can ship to any part of the world, but I can’t accept payments from any part of the world, and then I’m not taking the full advantage of selling online or selling on internet. Yeah, I think. And the other belief that we had is that well, startups are coming in a lot at that point of time, they’re not that big. So the volumes were not that high. But one of the beliefs that we had was that if we build a product that becomes a de facto platform for startups. And let’s say we get all the startups that have formed in the country. And we ensure that we retain them as they grow big. Few startups every, every out of every startup, thousands of startups that we onboard, and even few of them will grow up to become really big, and we could grow big with them. So that that was the second theory. And because of that, we felt that this is a very interesting space to get into because payment is like a basic infrastructure. It’s like electricity in the online world, like you have to have it. And if you build something which is really great, which works as you promise, the product is sleek. Then the kind of market size available to us was like, there’s no limit to it. Like, we were not just looking at the Indian market at that point of time, we were very certain that if we do this well, the market size in India would explode further. And so I think that that was the original thesis because of which we felt that this is an interesting space to get into. And we started putting our heads together into how could we get into the space? Again, it was not really easy, because it’s not like a ecommerce app, we can just build it in our backyard, in our garage and launch it. Payments is a regulated space, you have to work with a lot of partners and everything. But but that’s how the original theory came about on why two build Razorpay.

Rajeev Ahuja

So this is interesting. I mean, they were if I recall, 2014 – 15, many well funded young companies. So PayTM, obviously, is the poster child of Indian startups and is a scaled up company. mobikwik also was there. I think Bill Desk and Bill Junction were been around for far longer, actually. They they had they’ve done an amazing job in the 2000s in early 2010. Didn’t you feel daunted, I mean, you know, payments is heavily regulated banks bhi hain. And we have like at least six, seven well funded and more experienced people, though, you know, where will we land up? And you were just out of college, it’s not like as if you had eons of, you know, experience. So it’s quite interesting that you chose payments. And what was your feeling, then when you look around and saw all these big guys?

Harshil Mathur

Yes, so a couple of things. First is that a lot of the startups that were coming up at that point of time were focusing on consumer payments, they were consumer companies first, which is of course, as a has always been a very big field in India, I think their journey still not complete. People were fine with the wallet then and the UPI now but that continued. We were focused on B2B payments, and very few startups were focused in that space. So we were focused on helping businesses accept money. And not a lot of startups were focused on that space. The incumbents, large guys were focused, but they were they were lot of people in that space. But they were focused mostly on enterprises. And one of the most basic theories for us was that if we look at b2b payment companies in India, most of those companies were started by ex-finance folks, right? Like somebody who comes from came from finance background. And the reason for that is it requires approvals, partnerships, and all that. And it’s easy for somebody from finance background to build all of those things. It was very hard for an engineer, fresh out of college like me to build that. Right. So. So we knew that the barrier to entry for somebody, or technocrat like us would be extremely high. But the reason we felt that it was worth it is because while Indian payments space, enterprise payment space was dominated by finance based and sales based companies. Globally, as markets mature globally, around the world, we have seen that in the end, the winners in the payment space are companies which with the tech first background, with the tech first founding team, so whether you look at Stripe, you look at PayPal, you look at area and you look at Braintree, Square, I mean, all those largest, most successful payment companies globally, have companies who have come with a tech and product first background, and then built finance, into instead of just starting from a finance first background and using just using technology as a sidestepping rail. So I think I think that was a larger story. But you’re right, like almost every VC I met at that point of time, almost every banker I met at that product, I would ask me that same question that you guys are from finance folks, you don’t know about this space, there are 15 players already doing what you guys do. So why are you getting in that space? And I think, the finally, the major point that worked for us is that we started talking to our customers long before we even started building basically. So we started when we tell that the problem was big. We started reaching out on Facebook groups and other platforms that Hey, does every startup face, the same challenges that we’re facing, is that theory right. And you’re conditioned to do those startups, you realise that the problem is pretty deep. Right? And everything. I remember the YC, Y Combinator and there is one simple statement that YC keeps saying on how to build a big startup. It’s called make something people want. So a very simple statement that if people already want something, can you build it, you can’t have a better guarantee that your product will be successful. And we had that guarantee because we were talking to customers who were saying that, hey, if you build something very simple, in this space, and that solves for all of these thousand problems that I’m facing with these guys. Because nobody cares about my startup. Nobody cares what because I’m a small guy, if you build something which is tailor made for me as a small guy, then I would be willing to work for you. I think just having those customer’s confidence on day one. Finally, that was the most important point for us to decide that okay, even though there are 15-20 players in this space, there is this segment of customers who is still not being served well. And if you do this, well, they’ll they’ll scale up really well.

Rajeev Ahuja

You mentioned YC. And and, you know, this is a, this is obviously, the pinnacle of, you know, getting adopted by YC. And having gone through the grind. I know many other young companies from India have done that, how did this thing happen? I mean, you know, and maybe I’m sure there is a, there is an amazing story behind it, or a non story behind it. Can you just help us understand that?

Harshil Mathur

It’s a long story. So we were building a startup. But as I said, like, and we had started getting partnerships, bank, we started building it, but it’s still not lost, we were still just there in terms of getting the summers ready. And, YC has an application period open up twice a year. So why YC application period opened up. And I mean, we of course had heard about YC. It is a, as you said, is a pinnacle of startup world, it is part of some of the most successful companies in the startup space. So So we felt that okay, maybe let’s let’s apply to yc. Right, it’s a very simple process, there’s an online form that you fill in, we really had no confidence that we will get into yc. And because this was the time when, there was only one India focused company, specifically focusing on India, that had got selected into YC before us. So it’s not like they used to choose India focus for a company focusing on India as a market in a big way. You’re already starting to get into but we said, okay, let’s give it a shot. And the one good thing about yc application process is that the application form is pretty detailed. And if you’re building a startup, just going through the process, helps you think of a lot of things that you probably don’t think like initially, you just think, Okay, this is a problem. If you build something, and you go ahead, but you don’t think about the 20 things that you should probably think when you build a startup, YC application forms asks you all those twenty things. who is your competition? Why would customers choose you or them? What is your advantage in this space? What is the market size? How big could this be? What are 20 other things you could do if it were big? I mean, we have not thought of those things, just going to the forum was a pretty deep exercise in getting our own thoughts together. And I think, its okay, whether we get into it or not, at least we’ll have some of these questions answered for ourselves. So we filled the form and submitted with a low expectation of getting a callback. But they called us and they said that they would want to interview us. So they want us to fly to SF to go to an interview with their partners. elated. So we flew to SF. And the YC interview process is very surprising. So they have a 10 minute interview, and it is 10 minute by deadline, right? So so you get into the room, they talk to you. And at exactly 10 minutes, somebody knocks the door, and you have to get out, like, the interview cannot run beyond 10 mins, even if you wanted even if they wanted it. So, so yeah, it was it was such It was such a flash for us. As we get into that room, they started asking a couple of these questions. And before we knew it, somebody knocked on the door and said, Hey, you guys are done? So we walked out and and we again, had very low expectations because 10 minutes flew by so fast, we couldn’t even make sense of it. Whether we did well or whether we did bad. But later in the evening, their team called us and said that you guys got into YC. And I think that was a very important moment for Razorpay. Not just because of the YC, because of YC brand. But I think the way YC partners and their discussions with them discussion with their alumni, the discussion with the investor, they connected us to. So I think it really changed our vision a lot. I mean, we always knew we want to get into payments. But how big could this be? What all could we do? Getting some of the learnings on some of the pitfalls that people fall into when they’re building a startup? I think that was a very important important journey for us. And I think it paved the way for Razorpay as a company. I mean, I think we would have looked very different if we had not got into YC. So I think I think that mentorship was really, really helpful.

Rajeev Ahuja

For the yc kind of experience. Do you think we’ve managed to do something similar? For a size in India, in terms of many incubators, accelerators have been attempted over the last 60? I don’t hear of anything, which has got even building, you know, similar cache ultimately. And why is that?

Harshil Mathur

I see, building something like YC really it takes time, right, because YC didn’t earn their reputation on the day one, they essentially started the concept or invented the concept concept of accelerators. They’re one of the first accelerators in the world. And they’ve come through a lot and last in 15 years of existence and reached where they have reached. So I think buildings something like YC, I think there are a lot of people are trying that and they are doing really good at it. Like for example GSF is an accelerator that I sometimes talk to people, a lot of good coming to come out of where they’re similar accelerators, but it takes time to build like it’s a great and you will have to go through that. I think the reason why YC is so famous today is because some of the companies in the early batches went on to the multi billion dollar companies. Yeah. And it takes time to build multiple companies. It takes about seven to 10 years for a company to hit unicorn status. And that’s when people start realising. Okay, this accelerator is actually doing well. So I think we still get to cross that timeframe. But I’m pretty sure we could build something similar in India going.

Rajeev Ahuja

Did the YC stamp open up the doors of funding for you? Did you or did you raise funds before that?

Harshil Mathur

No, we hadn’t raised any funds before yc. So, of course, YC was important from funding perspective. But I think the major advantage of yc would be beyond funding. Or just setting up the right structure for the organisation was the I’ll say is the most important aspect of YC mentorship, because their patterns will help you run through. Okay, when should you hire your first sales guy? When should you hire your first engineering leader? When should you hire for sales leader and things like that? a lot of startups go overboard in it, hire too early or too late? I think. But that was the most important step. But from a funding perspective, I think what YC does is that they have a demo day at the end of three months of mentorship. And Demo Day is a very unique event, it is one of the first times that investors are running after founders versus founders running after investors. Because you are in that room, and there are 300 investors in front of you. And you just pitch your startup and all. And at the end of the by the end of the day, you have exchanged 300 business cards with all investors, where everybody wants to get a share into you. So I think the great thing that demo day does is that it flips the table around. And it fast tracks your fundraising experience. So after a demo day, within two weeks, we had close to two and a half million dollars, two and a half million dollars in funding. And I don’t think we could have done it that fast. If you are like not part of YC, because I typically would have and we had raised two and a half million dollars from 33, angel investors, to set up meetings, negotiate terms and all of those things with 33 Investors isn’t it sounds like an extreme task. But YC makes it is so simple, because they already have well defined terms. And so the terms are well defined. You don’t have to negotiate on termheets and stuff like that. They bring everyone into the same room so you don’t have to chase 30 investors, for example, to set up meetings, calls, get a commitment, all of those, and it just puts puts a clock on the on the entire process that because everybody knows that there’s so many investors that you’re in touch with. Everybody wants to move fast. So so the fundraising process becomes really smooth because of that.

Rajeev Ahuja

Yeah. And since then, Harshil, you raised by my reckoning about another hundred and 20 odd million dollars.

Harshil Mathur

Yeah, about 100 million dollars. Yeah, hundred and 5 million.

Rajeev Ahuja

I’m a little shocked Harshil, that it’s been six plus years, and all you raised is $120 million.

Harshil Mathur

Yeah, so I think that’s the advantage of being in b2b space. Because you’re not in b2c I burn has always been extremely low. And because of that, we always always had more money chasing us than we needed. So at any, almost every found funding round that we raised, right from when we raised the series A of $9 million, we were offered 15, we raise nine because we didn’t really need the money to a series B we raise 20. Last round, we raise 70, almost every round, we have raised lower than what we were offered, because unlike a b2c company where you want all the cash, you can because you have to market you have to spend money in acquiring customers. In our case, money doesn’t help us scale a lot faster, we need money to hire the best talent and build the best product. But like, and a lot of times I tell investors, and if I had, if I had raised $70 million, or versus 150 million dollars, it’s not like my company will grow 2x faster, unlike a consumer company where it would, and that I believe is a is the biggest boon of being able to be of course, there are disadvantages of being in b2b, you don’t get as much limelight, you don’t get as much public visibility. But, but I think you can build a most strongly sustainable business, your burn is always within control. And the one is always on tap, like you can always turn turn it on very smoothly and make money where if you try to suddenly stop marketing pushes your growth will stop in a b2b space, the growth is not directly dependent on how much money we invest.

Rajeev Ahuja

That’s an interesting segue into your business model. And I want to understand, you chose B2B , you had a well defined experience based gap in the market of young companies who looked at seamless way of receiving and making payments. What was what was the learnings along the way as you started implementing that? I mean, if you could share with us.

Harshil Mathur

I think there are a lot of things that we learned along the way. Startup journey, the best part about startup journey is that you grew a lot. A lot of beliefs that we started with, in early days changed. I think a couple of things I’d say is that first thing that worked well for us is that we stayed very true to what we do. We were very clear on day one that we want to build finance and FinTech for businesses. And even though we have launched a lot of products in our journey, we have always launched everything only for businesses. So, for example, when they were wallet wars going on, and everybody was trying to build, a lot of people asked us, even investors asked us, why don’t you build a wallet, like you have so many large merchants, why don’t you build a wallet? We said no, wallet is a consumer product we are a b2b company, we will not want to get into that, then you have UPI, or a lot of everyone was building up apps, and a lot of people asked us, why don’t you build a UPI app and we are very certain that no, we, we are, again, we are a b2b company, we will build products, we build UPI for businesses, we will not build it for consumers. Similarly, pay later. And so many things came out again, that focus really helped us. Because, as you can, as you’ve seen, like a lot of companies came in the wallet space, very few were able to survive, a lot of these given UPI space very few were able to survive. Us being very deep into our customer base, we were never threatened by any of that. And that allowed us to continue to work well, even though there were so many large and heavily funded companies in all of these segments.

The second thing that we learned in b2b space is that, I think, as any founder right in, in the early days, when you’re building, let’s say, a payment company like us, you’re always attracted to the large guy that hey, if you can one large customer, and then that will make up so much volume that you don’t need to worry about these thousands, small customers, right. And, and I think I was no different. I was also into that greed. So once you got funded, I used my investors connect to get connected to companies like Flipkart and Snapdeal, and some of the largest guys in that in that time. And I started talking to them, hey, by the way, we are building this interesting thing. And we were at a point where at a meeting where we could have almost, if we had pushed a little harder, we could have gotten an entry to one of these large guys. And I think that part of time, we had a conversation with one of our angel investors, and he said that he Are you sure you want to get into the journey? And we felt that like, I mean, why is anyone got a doubt, if you get a one, one customer like a Flipkart or a Snapdeal, then yeah, you’ll make 1000 or 10,000 of the customers that we will get on this in the space. But I think during the country, we realised that it was really not a good idea for us to do that. Because we had got that one large customers, suddenly our Of course, our volume would have jumped and our graphs would look very different than the present to our investors. And then we couldn’t afford to lose at volume will be in very strongly and deeply concentrated into that one merchant or two merchants. And then we’ll have to build anything that those large enterprises will ask us to do. Because we can’t afford to lose them. So and their demands will be extremely high, There’s no possibility that our product would fit them well, completely. So they will ask for 1000 features 2000 features, and we keep building them because we couldn’t afford to lose them. And I think our entire company’s trajectory would be built to serve that one customer or two customers. And I think we’re fortunate that we had conversation and we decided not to go ahead and close that one large customer. And I think the mentor that we had a conversation with gave us this example that hey, you could eat. You could eat like 50 rabbits, you could eat like 10 deers, or you could eat one elephant. And eating one elephant sounds exciting. But once once you get that, then you’ll you will be soo done with it, that you will not be able to do anything else. So first of all, you will take a lot of time to get that one elephant. And even if you get it on board, then you’ll never be able to move forward from it. And and I think that analogy fit well for us that, hey, you want to target the rabbits and the deers. But I think it’s too early for us to start targeting elephants. I think that’s really important in the b2b space, because a lot of companies end up becoming, start with a product company, you get one large client and you end up becoming consulting company, because you have to keep building custom features to solve that one fly was only for us because he kept focusing on startups, we kept scaling up through that channel organically. And and that allowed us to stay true to what we were, which is a product company.

Rajeev Ahuja

Yeah, this is a very useful insight. And I’m actually amazed, I would love to be a fly on the wall in your board meetings. You know, I mean, this kind of realisation for insights and the ability to listen, you know, I mean, I think one of the challenges we all have, not not just people, young companies is just that, you know, you have to learn to say no, to to a thing, which is perhaps too early for you. And I think that’s one learning I’ve had in the last five, six years at just about building it big, you’re not going to build long term durable value. And I think you’ve made a phenomenal point that if you want to eat the elephant, you need to be you need to be far bigger than them because otherwise they start consuming you. You know, how is it been? Since then you raised money. You’re You’re very enviable Angel and institutional capital. You know, we’ve had some of the best Sequoia, Matrix, Tiger, Ribbit. You know, how has it been managing such large number of professional investors? And and how the dynamics worked out? You know, when you’re taking calls? I mean, have you balance everybody? And how do you leverage their unique strengths?

Harshil Mathur

Yeah, so first is that like, it’s not just that the investors choose to invest in our setting-up, one of the things that a lot of founders miss out. And again, this is good YC focus on is that it’s not just as investor choosing you, you are also choosing the investor. I know. And a lot of times, in early days, like, you’ll have that, okay, somebody’s giving you $15 million, and another is giving you 10 million dollars, we’ll go with the guy who gives 15. But, like a $5 million Delta would not matter much if the investor is not the right fit for you. And a lot of times these short sightedness works really bad, because you get a $15 million guy, but he doesn’t understand your business as well as a $5 million guy did. I think one thing that we did in every round is that we while we were talking to investors, and they were doing diligence on us, we also did small diligence, of our own, we talked to the founders, that they had funded before the founders that had failed that they had funded, and how some of these investors have supported those founders in their tough times. And I think that was really important. And it is an important exercise, and almost every founder should do. Because, again, when you’re getting tie up with an investor, you’re, it’s not a one year two- year journey, or 5-10 million dollar Delta would be finished in two years. But the investor would be on your cap table for next five to 10 years if you’re building a long lasting company. And you need to ensure that you share the same vision, same ideals and same models on how you want to build a company up. So, that’s one thing that worked well for us, all investors have a cap table really understood what we were trying to do, what we are trying to build, and the kind of belief system that we had, and we share a very strong collaborative relationship. So I mean, my investors played a very important role of being my sounding board, right. So that, okay, let’s say I decide to build, well get this large customer on board, I’ll share these guys, and they’ll share their viewpoint. And a lot of times when you’re deep into your business, and you’re into that day- today, probably don’t have the time to think outside. From an outsider perspective, I think investors play that role very well. And having a well functioning board is an important ingredient of building a successful company, that the board plays a very strong sounding board, sounding board for you. And any idea that you have, or any big thing that you’re doing, you run by them, and they give you their important, it doesn’t mean that you do exactly what the board says. It’s your company on here, you’re the founder, and you’re the one who has to decide what direction the company should go in. But hearing every opinion is important. And just learning from the experience is really important, because a lot of them those insights are very helpful. Yeah, I think, our board are run very strongly in that context, that there’s a lot of free flowing ideas, a lot of the things discussed. And at the end of the board, I know that my investors trust me enough that while they have given their opinion, if I decide to do X instead of y that they have suggested. They would still be okay with it, because they have invested in me, and not just a business. So they want to trust me. But I will always want to hear their opinion. I think that has worked well for us.

Rajeev Ahuja

The last six years Harshil, the Indian payments business has gone through, you know, a huge amount of expansion, but there’ll be many moments where it may have looked fairly bleak, or what the hell is happening? Or fantastic. You know, what would be that one or two down moments in your six years of building it out? Where, if at all, there was where you felt, hey, you know, do have to go back and figure out why did we get into this in the first place?

Harshil Mathur

You know, there are moments, of course. And startup journey is full of ups and downs. I mean, if anyone says that, it’s only ups then they are lying. So there are definitely moments to think anything. But as it started from day one, like for example, like I said, like we decided to build something like this up. And we started working with banks and financial institutions and building that. And I think we were a year into the journey, as I said, like, we started building it in 2014. But we went live in March 2015. But before we went live, I think in December, January time frame, we started discussing within ourselves that hey it is taking too long. Because in a payment space, we have to go through a lot of compliances certifications, approvals and bank agreement closures, so many more things that purely we didn’t know when we started, quite honestly. And when we were going through that, at certain point of time, we, me and Shashank got together and discussed that. Does this even make sense? Because if we were building like our consumer startup or an e commerce startup or something like that, at that point of time, we would have been able to launch it in two months. But this is taking way too long. Are we doing the right thing? And this is how the journey will be how can we keep innovating because if everything takes one year Six months to launch? And how would we innovate? How do we stay ahead of the curve? I think at that point of we definitely did consider that maybe you should shut this down and do something, either less dependent on other players in the ecosystem, or maybe go back to our jobs. I think the only thing that kept us going at that point of time is that as I said, earlier, we were conversing with the customers. And as he kept conversing with the customers, we realised that we have to solve this hurdle. We do solve this, we have to solve this hurdle once, once you are through this, and we already have customers waiting for us and so that we could grow really fast. So we started using the time a lot more to talk to customers, and ensuring the customers are ready for us, maybe went live. So I remember we went live in March 2015. And the day we went live, we had 300 to 400 paying customers on day one. This is the day of launch. And this is because we had primed those customers through the entire journey, that hey, we are building something like this. We wanted and stuff and and they were waiting for us to go live. They actually done the testing integration on all those. So the day we went live, we are like 300 customers on day one. I think that worked well. Again, through the journey. It’s an important time in like markets are going really weak in India and this is around 2015, sorry, 2016 when the market had gone really weak in India, again, at that point of time we we did feel like okay, maybe maybe that journey will not be as smooth as it thought, though. Because at that point of time, VC funding was drying up. Businesses weren’t scaling up much. This is the time and a lot of a lot of ecommerce companies in food delivery companies were shutting down businesses. And at that point of time, the startup ecosystem looked really weak. I think at that point of time, what helped us was our investors. Well, actually, one of our investors went ahead and offered us a series B term sheet and said, Hey, while the markets are doing bad, we firmly believe that I think your business will do really well as the market starts recovering. And we wanted to offer you a series B term sheet,. and that it wasn’t about the money. And then you still had enough runway to last and but getting a series b term was just showed to us that okay, it’s not just us alone that believe in this. There’s somebody else outside us. There’s an investor and board member who believes in our journey as well. Yeah, and I think I think those things are really important in these times.

Rajeev Ahuja

Yeah, no, you hit one a very important point, I think. It’s the stamina of you and your team and your board members and your investors, frankly, because, you know, they are in it for the long haul. But they also have an investing cycle and exit and everything. I think, as I’ve seen, I mean, India is a very, very volatile market from what you would say, addressable market, I mean, and the economics of your business, actually, another point I want to chat with you forever change. And then you just wonder, you know, why are you doing this. And then suddenly, one more regulation, more regulation comes, and it feels like, you know, it is no longer that free, the stamina of trying to wait it out. And I think sticking close to what you believe is a long term thing, has actually helped many people and you know, you may do pivots, which is in your in, in your thing may look very, very necessary. But I think too many pivots, also cause issues down the road. And I think the fact that you would, oh, we had we had Demonetization, we had GST, and both these events, or that the market would expand dramatically. And it did perhaps for a short while. And then again, it went back. You know, so I remember those four-five years to point things have gone higher, but I think there were many, many lows as well as the promise of the future. As you see today Harshil, you know you are a very relevant and scaled up and reliable more than anything? You know, I’m sure the elephants talk to you now. And we can we use your payment services? Because you are one of the, one of the leaders in the in the Indian payments market. What’s the future looking like for you and payments in general? And how do you keep building scale building more services? I know you launch RazorpayX, you are know you’ve launched corporate commercial cards, you’re looking at some lending, you know, all of these things. So is the future going to be adding more services to the same merchants? Because they all need it and bank like ours are staid or fuddy, we are adapting to those times. Is that the opportunity you’re seeing?

Harshil Mathur

Yeah, I think that India business startup ecosystem is still fairly nascent, like online payments is a very small part of it. And when we talk about this digitization of businesses, I think the only thing they have done so far is digitize payment acceptance. I mean talk about this but digitising businesses, that’s just the tip of the iceberg. every other aspect of business. money management today happens through non digital means. So whether it’s paying our salaries to paying or vendors paying taxes to getting a loan to deploying money into Treasury, everything is still right now, non digital in the experience. And that’s something that we really want to change. I think our overall vision has been that we want to be in the business of moving money for businesses, and we want to build that financial ecosystem for disruptive businesses, I think we have only scratched the tip of the iceberg so far. Ah, and the reason I think we want to go deep into that, like, payment, acceptance is a big market, and we need to grow big there. But, but unless we help a business digitalize inside out, they’ll never understand its true value of digitization. Like today, a small merchant doesn’t want to accept digital payments and wants to accept cash. And the reason for that is that everything else that he does x happens in cash. So just accepting money digitally and putting into his bank account doesn’t solve anything, because you should take the money out in cash, again, to pay to his vendors to pay his employees to pay everyone else, right. So. So it’s very important that a business goes through the entire digitalisation journey, it’s then when they will realise the value of that. And that’s what we want to build. So, so we have got into Razorpay X, the goal of that is to digitise our banking experiences in a big way for businesses. And what we are doing is we partner with, fortunately we are partnered with RBL bank on that. And we work on top of the banking rails to build a lot of software solutions on top of the basic banking rails, right. So if you do so tomorrow, if you want to come in and say that, hey, I want to do payroll, we just don’t show you in a box to do NEFT transfer, we show you everything 10 things you need to do if you do payroll, so you’ll have to enter the CDC to pay Professional Tax on it or to pay PDS on it or to pay pf on it, you press one single click and we can do all those filing five payments for you and get you the compliance is that right. And that’s actually the value of digitization. And it’s not just about doing an NEFT transfer. And I think that’s the journey that we are trying to build. Similar thing on lending side we have not just that hey approach Razorpay and we will give you a loan. Nobody can approach Razorpay for a loan, we don’t have that model. So we’re not like a bank or a NBFC that model. What we do is that we look at the businesses that are already with us, and they’re using us for payments, they’re using us for RazorpayX, we look at their data and and use that to compute that okay how much loan could this person get and using that we reach out to them that hey! a loan is available to you just do KYC and get a loan out. I think that is a very interesting one because a business doesn’t have to give me 20 documents or 30 documents just to prove that, hey, I am credit worthy for this loan, we already know, whether you’re creditworthy or not, and then we reach out to you. So I think the way I look at is that in US, all of those things have happened, right. So if you talk about payroll, if you talk about vendor payments, or b2b payments, all of those things, there is a there is a multi billion dollar company in each of these segments. Because US as a market is mature, like parallely, like all of these segments have grown parallely somebody built payroll somebody built. And each of these companies have gone ahead and become multi dollar companies. And an opportunity that we believe that exists in India is that none of this exists. Most of these things are done manually. Most of these things are done on Excel files or outsourced consulting companies. And if you are able to build this vertically or horizontally integrated platforms that solves for the fundamental business needs. That I think that is an opportunity that that probably an entrepreneur, like me would not have in any other market.

Rajeev Ahuja

I think you’re absolutely right. And you know, I don’t have any hesitation thing as RBL bank, we’ve learned so much from the startup ecosystem, and especially from people like you, you know, because there are too many things to do. And frankly, banks are hardwired in a certain way. It is happening but very tough to change to address a fast moving environment. Now, talking about fast moving environment COVID. Okay, and we’ve talked about this earlier. While it has a very important health aspect to it. We’ve heard a lot about customers, individuals, small businesses, necessarily now moving more and more to digital services or for consumption and therefore for payments, delivery, etc. How has things changed for you as a business? And what do you think the next couple of years could be? Do we go back to where we were? Do you think some changes are hardwired now? I do think the default option for many new businesses will be digital first?

Harshil Mathur

Yeah, COVID is definitely a very important change in the business ecosystem of India, and not just India across the world, I think given the health aspect aside, I think no business perspective, I think the way businesses conduct themselves is drastically changing. And I don’t I think some of these things will state you after things come back to normal. Because change has been for very long. And I don’t think a lot of these changes are unnatural. I think a lot of the changes are not having just because of COVID, these changes were happening. But COVID has accelerated that, for example, if you talk about digitization, about accepting digital payments, these are things that were happening, but a lot of places, these changes would have happened in next two to five years. But COVID accelerated that and some of these changes have happened in six months. And, and I think, even if things come back to normal those changes are not going back. I think from our perspective, from a business impact perspective, what you’re seeing is, okay, the first couple of months of lockdown, everything went down. But today, we are 70-80% higher than our pre COVID volumes. Our merchant signup numbers are through the roof right now, we were doing like 200%, higher number of merchant signups compared to pre COVID levels. Because every merchant right now starts accepting digital payments on day one, a lot of offline and traditional physical merchants are trying to accept online payments, people are selling things on Instagram, Whatsapp, Facebook, a lot more than they would sell it physically. Some of these changes are bib. Another example, is B2B side I will give. As a Bank you will understand it pretty well. FMCG supply chains are some of the strongest networks in the Indian business ecosystems. And lot of people have tried to digitize that ecosystem, prax have tried it, we have tried it. It is extremely difficult to move anything there, because the ecosystem is so deeply interlinked within distributors, retailers, the brand and everyone else. It is hard to move all of these together. Let’s all get digitized. Somebody will always would say that hey I want to work the way I used to work. And everybody would go back to the same way because nobody wants to disturb business. While this has not happened, in last 6 months, we have worked with atleast 4-5 FMCG supply chain companies where we have worked to digitize their entire supply chains. And this is because people right now have a fear of cash, shopkeepers don’t want to pay in cash, distributors don’t want to deal in cash and that’s why all of these folks are changing their supply chains. That’s a big change. Once the supply chains are digitized, it is not that after COVID they are going back to cash. They always wanted to digitize but not body was willing to make the first move. Because of COVID everyone has come together and made that move. Some of these changes will be everlasting. I am not saying everything will stick. Right now, lot of shopping that used to happen in mall is now happening online. And some of them will go back to malls when things open up again but some of these changes in the ecosystem, where base infrastructure is changing, those changes will be everlasting.

From Razorpay perspective, what we have done is that we are spending a lot of the time in understanding these changes and recaliberating our strategy for next five years. Because the post COVID world is not the same as pre COVID world. And, when you talk about digitization it is not as simple as, hey! We used to do these meetings in person earlier and now we do it on Zoom calls. That’s not the only change. The way our sales run, the way our operations run. The way our customer service support run, all of those things need to be reimagined. We are working very closely. While COVID is changing lot of factors externally, it is also changing a lot of factors on how companies run internally. The companies to learn this the fastest and are able to adapt to the new system will be the ones who will win in this new world order.

Rajeev Ahuja

Great, excellent very good insight. Let me just turn to the last section Harshil, it is about you as the Co-Founder & CEO What keeps you driven, what keeps you motivated and what have been the some ways you have grown. You mentioned to me, building a startup is also growing yourself. What would be those two three things you would reflect back and say, these are the things that have held me strong. These are the learnings I have had and this is what keeps me going?

Harshil Mathur

Let me start with the second part first. It has been an exciting journey for me and it has been through its ups and down. I think the most imp things I have learnt is that building a startup is all about perseverance. You will always have 20-30 instances in you journey when you would want to give up, I just think persevering through it, ensuring that you are able to change directions, move around, wriggle your way through and find a way to keep going is really important. If you want to give up on day 1, day 10 or day 1000. There would be many reasons you would think why it would not work, but you have to find those 5 reasons of why it can work and what of it works and I think it is really important to focus on that. Couple of things that have changed for me is that I have become very patient as compared to when I started. I think in early days I would go very worried, hey this client is not going live, let’s take it live today, this feature didn’t work. I would go really impatient about it. Over the time I have learnt that, ok where all these things are important. In long term, no single incident or event is as important, what is important is to ensure that our focus is on track. I have become very patient compared to when I started with Razorpay. Building a startup is about patience, you have to spend your time,. You have to go through grit. There are no shortcuts to it. The elephants story, just tell that there are no short cuts to it. It is not like get 4 customers and suddenly you are a multi-million-dollar company. May be you will become but it will not last. You have to go through the grit, you have to go through the journey. And only then will you come out of it not only successful, but as a sustainable business. It is not about getting that high valuation, on that particular day it is about maintaining that, it is about being able to grow that and give value to your investors, give value to your clients, give value to your employees and it’s a long journey. It is important that you ensure you are building for it to be sustainable.

Coming to what motivates me, I think in early days that wasn’t a question because it was all about establishing your startup. In last 5 years, Razorpay has been able to establish itself. What excites me right now is the kind of opportunity we have in India, my co-founder left multi crore job in the US to come back to start razorpay where we had zero salary for atleast one and half year and the reason for that is that India is at a very exciting place right now. We have the right focus from the government, we have the right focus from the policy makers, we have the right focus from the regulators, that they all want to do the same thing we would want to do. They all want to digitize the country, they all want the country to move towards the digital era. And we have a large population base, we have a large economy and hardly 2-3% has gone through digitalization today. So, the kind of opportunity you have, it is not about the money, it is not about the profits that you get, you literally have the opportunity to influence the lived of about a billion people and I think that is really exciting.

Rajeev Ahuja

Excellent, I mean really really fantastic learnings along the way. Let me couple of last question, who is your inspiration. We all have these role models, people we have read about, people we have met, who would be your inspiration, business or non-business.

Harshil Mathur

There is no single person. But if I were to club it together, I think, it is Paul Graham, the founder of Y Combinator is definitely one of the rolde models, I have read his essays from college days. And his essays go deep into how things should be, or how things are, are really interesting, it changes your perspective. From entrepreneurial perspective, I would say Elon Musk. The kind of things that he is doing is not just having a business impact, it is having an impact on the humanity. If someone is able to drive 3 or 4 things together which has an impact on humanity, most people are not able to do even one thing that impacts humanity at world scale. And, the guy is single handedly driving like 3-4 things that have an impact on humanity at world scale. I can’t think of anyone else who can do that. And lastly, Bill Gates, not for the things he has done with Microsoft. But more so for the things he has done after Microsoft, with the Bill and Mellinda Gates foundation, the things that he has done to change the wolrd, it is really exciting to see what you can do once you have crossed that journey where you don’t have to worry about money what kind of impact you can have on humanity.

Rajeev Ahuja

I actually will echo all the three names and I have one more which I hope you guys will grow into is Patrick Collison of Stripe. You guys are doing a remarkable job and I hope we talk about Razorpay being the India Stripe equivalent. Any last words for budding entrepreneurs? You are still a young entrepreneur, and I hope you maintain that hunger and edge. Any last comments for people who are going to see this and people looking to start young companies.

Harshil Mathur

Yeah. I mean entrepreneurship is all about taking the risk. And, every founder who has decided to build something of their own has taken that risk and when you are taking the risk, it is high risk. You have 1000 reasons of not continuing further. I think one thing I have learnt in our journey with YC is that growth triumphs everything else. As long as you are growing, as long as you are moving forward, and growing not in terms of only the matrix but growing in terms of the customer that you service, growing in terms of the satisfaction that you customer have and as long as you are growing in the matrix that matter everything else will take care of itself. So lets say, you are not getting funding today, as long as you are growing the investor will come back, some employee doesn’t want to join you, you keep growing the employee will come back, the customer who doesn’t want to use you today, we have 1000 examples of such customers who have come back as we have grown and demonstrated that hey! We got this. So everyone will come back as long as you keep growing in the matrix that matters. That’s the most important aspect of entrepreneurship.

Rajeev Ahuja

Excellent Harshil. As always, for me to talk to you has been many learnings every time. Clearly we drive a lot of energy from people like you, from your success as well as from your learnings and we all think that companies like Razorpay which will continue expanding the boundaries of financial services and helping people like us actually become more and more customer centric. So, thank you Harshil once again for your time and for your amazing journey along with us.

Harshil Mathur

Thank you Rajeev, it was really very interesting to have this conversation. Thank you!

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