Razorpay, valued at $3 billion by GIC and Sequoia India, has been riding atop the digital payments tsunami, witnessing an upsurge in virtual transactions through its online platform. As the digital economy grows in India, the company has been actively working on launching new products and features to keep with the demand and challenges. Shashank Kumar, Co-founder, Razorpay, shares his thoughts on the working of the tech platform, banking, startups, and more with us. #startups #razorpay #leadership
How did the idea come about considering that this space was already crowded?
We started back in 2014, which now seems very long back, in hindsight. When Jio hadn’t happened, demonetization hadn’t happened, so much push that we have today on digitization was not there. We, me and co-founder Harshal, worked at different companies then. I was in Microsoft, and he was in Schlumberger, and we kept on working on side projects. So one of the side projects is where we wanted to accept payments. And that was going to be like a challenging task.
Start accepting payments on the internet is a long, cumbersome process. You need to have a registered company. The banks ask for many physical documents and ask whether you are profitable or have an office set up. A lot of SMEs operate from their homes, a lot of people that may not have a physical location at all times. So with mobile picking up significantly and with the startup coming online, this was when the startup revolution was really beginning. So that is where we felt that there’s a huge gap in the market.
How is Razorpay different from the rest of the players in this space?
It was definitely solving a need for ourselves. I mean, for the economy itself to progress, we strongly feel that we need to build digital goods for India. So we definitely started from a place where we are trying to solve our own problem.
But I think there’s a very strong realization that they’re going to be like, millions of people who are going to be like us in terms of that, you know, they’re trying to make ends meet. So it was a very simple leap to say that we need to solve for every entrepreneur in the country, but It definitely started with the problem we ourselves faced.
When you first started out, did you think the journey would turn this successful in a comparatively short span of time? What were your initial apprehensions?
Building a business is a journey of events. It’s a huge multi-year marathon, but I think the initial years are often the toughest in figuring out how to get traction and how to get product-market fit? We started in Jaipur; we didn’t start in Bangalore because we wanted to really keep our cost. So despite us having some savings, I think we are very cognizant that we should try and make ends meet with the least amount of money possible.
Our expenses used to be like five thousand rupees per month or a maximum of ten thousand rupees per month, and that’s like the moment you take one flight, and that covers that cost. We used to go to banks a lot because we had to deal with payment, and banks are the ones who give out those rails that are there. Most of them were not even aware of us, so they laughed at me because I was 23 years old back then. It’s an age where people usually don’t take you seriously in India. But we have to figure this out.
And then we would have messaged a hundred plus bankers on LinkedIn, whom we can find who we thought could probably help us with payments. And only a few of them, a handful of them, six to seven, would have replied. And then, we had a meeting with three or four people in Delhi and Mumbai.
We took a business plan, which we had prepared overnight. Many bankers said no in that process, and we were waiting for that one yes, as ultimately, only one yes matters. And when we got that one, yes, after meeting multiple people, we were delighted and felt that we had won the world. And now, we have got nothing that is going to stop us. But, I think that was just a start, and I believe there are significant challenges every month or two months.
With the likes of PayTM, PhonePe, InstaMojo, Zest Money, PayU what is RazorPay’s strategy to withstand competition?
The payment is a vast field, but I think our call out is to help the businesses. Most of the payment apps like PhonePe, GooglePay or WhatsApp are playing on the consumer side. They want to solve digital payments from a consumer perspective, where our mission is to provide for SMEs and businesses as they are the heart and soul of the economy. We strongly feel that if you’re able to advertise businesses and move them from manual processes and compliance to digitization and automation, you should go ahead with it. I think that would lead to a significant uptick in the country’s GDP.
I think in the last 12 months since the pandemic started and beyond. There is a massive push because, anyways, everyone is working these days remotely, to the extent that your industry allows, and it’s giving everyone a chance to rethink from scratch. How can they utilize the cost much better? And how can they get more bang for their buck? And that is where we’re solid for any business which needs to accept payments online or do its financial operations well. I think Razorpay is a great partner of choice there as we’re able to demonstrate significant value.
I’ll give you an example, in the pandemic, we have partnered with hundreds of NGOs and helped them with a donation collection. And we brainstorm it and say, ok, how do we take it to the next level? So we tied up with thousands of businesses who are there on our platform and every time a successful payment happens, we show them a message saying that they want to donate something for the ongoing pandemic, and we have helped raise more than Rs 25 crores in terms of donation at this point. All of this is going to a distributed set of NGOs. So this is not going to a centralized fund; it is going through all the local groups where they can deploy those funds and utilize it in an optimum way and immediately impact what they can do for you in this scenario.
Your valuation has tripled in 6 months with the series-e funding round. What lies ahead for Razorpay? Will there be an IPO announcement next?
I think, for the next couple of years, we are very clear on where we want to be. We want to continue helping with the Digitization journey that we are on for SMEs in India. We want to ensure and see how we can help millions of businesses digitize, come on the internet, and take advantage of distribution via the internet.
For example, we launched our payroll product almost one and a half years ago. Payroll is such a painful process, and every employer will typically spend eight to 10 hours every month wrapping their heads and getting payroll right. And spending on compliance as that spending time and getting compliance and talking to their CA” s. We take all of that away and make the payroll simply a one-click process, and the business owner does not need to worry about it at all.
What’s your advice for aspiring entrepreneurs?
I think for me, it’s always been that. It would be best if you were building something larger than life. One should work more significantly than life because how can we have an outsized impact on the people around us? I’m very fortunate to receive a good education. I’ve studied through IIT Roorkee, and I know how much education is subsidized by the government. So I feel like I must give back to the ecosystem in a huge way.
I’m in a very privileged position to be where I am. So if I have to make use of that opportunity, I have to try my best. And that may result in failure, but that’s fine. But if you don’t shoot for the best you can do, you will never do your best. I think in my view, the way I look at it, I always want to give my 100% to whatever I’m doing; I always put my best foot forward. And irrespective of the results, at least I sleep peacefully because I’ve tried my best, I have tried hard, and after that, success or failure doesn’t matter.