Disruptive Innovation - Fireside Chat Noshir KakaMay 31, 2021
there's a glimpse of this brave new world sitting on this panel here tonight as you think about the future and even think about today which is what you know Ashish and his company will help you book pretty much anything in your life bhavish will essentially help you getting there Vijay will of course be his wallet and help pay for it and Harish as we tend to say with private equity and VCs today will really end up paying for everything the only thing consistent in this picture of the future will probably be sitting McKinsey Around telling you how wonderful the future is, we believe that the
disruptivetechnology that technology enables, whatever you want to call it, actually has the potential and the potential to add twenty to thirty percent of India's incremental growth in the next few years. next ten years to give you an idea of that. that's the size of the manufacturing sector today but bhavish one of the amazing facts we hear is that for every carpool on the street today it's real ly replaces nine autonomous vehicles whether you're in the auto industry or if you're in the How would the steel industry respond to this type of
innovationcoming from players like Ola?
I think I've heard the word interruption a lot today so let me start with a little anecdote the only thing I really think I've interrupted is my parents life when I started a polo you know my dad thought I'm I mean, i grew up in a small town in india ludhiana and my dad thought i am you know when i told him this idea that i want to build this mobile app to add taxi he said better to peace of mind before banda travel agent and i said i will come back to you after a year, but you know, I think the mindset of the older generation is changing very fast and there are few or big trends that I see from a perspective that is, you know, completely changing consumption in India and the main one of that is mobile phone and the mobile phone coupled with the ion data revolution coupled with easy access to capital for entrepreneurs like us to create
disruptivebusiness models is really changing.
I think it will change every b2c consumer vertical in India and we are just a small example that actually all three of us are small. You know examples of that if I look at our business, one of the key pillars that I feel is consumer and supplier data, and how well can we process that, how real-time can we process that you're going to know what you're going to do let's interrupt I like to feel like we're actually creating because nothing exists in India at the moment so you know it's going to make you create new business models, you know, shift paradigms jump paradigms and I think that's fundamentally how I feel the industries traditional must maintain. mind Vijay let me turn to you or theotokos said startups are giving him sleepless nights.
I'm sure, among other things, what are the headlines doing that are giving you sleepless nights or could g? I have sleepless nights, what I have learned in this country is that sometimes the calculation of the size of the market is distorted because you have not yet seen the supply of that product, so sometimes the oversupply and the supply itself they create a market. I don't think it happens in many. industries and many times, but when you start from nothing, that judging time I mean the classic McKinsey study on cell phones that we know from AT&T is an example there that before the cell phone exists you can't just the market or cell phone before it there is payment you can't just a payment marketplace so we bet on that and I'm totally surprised today.
I see in offline world offline world means family shop Khurana wallah auto rickshaw and taxi driver who is not a smart person who has traditionally never used a payment system and obviously visa master or anyone who a bank would not come to give them a pause machine it is actually by virtue of our QR code that you place a sticker or your phone that you use as a pause you are doing in a month of January we did three and a half million transactions in a world outside of line that was like a rock star number to an online world a year ago and offline is doing that now if somebody has sleepless nights somebody should have a sleepless night will i? being able to capitalize on the digital revolution that is happening in FinTech in this country not because someone is taking the cake someone is making a bigger pie for everyone to share in this country Irish heads are turning towards you the cynics among us would say that We've seen this all before right some of us are old enough to remember at least two cycles of what's really different this time okay you know I thought we could talk about
innovationso there's this product innovation that people talk about where you create a new product or create a new service and create a new way of doing things, but what's happening right now is we're seeing a disruption with data and capital now data are clearly that you have hundreds of millions of consumers that can be reached on their phone devices so that you can instantly launch a product that heard Netflix launched in 100 countries in one day essentially any of the gentlemen sitting here all of them I mean I'm sure the apps are in the room people have at least two or more of their apps on their phones here, so the fact that it's different is that one is that when you use the power of data and you can get instant access to many millions of customers, each one can suddenly create new markets, so what's happening today is that these companies are coming and putting a data layer on top of the brick and mortar business and the data layer is becoming a gatekeeper for consumers so essentially between Paytm book my show book my shows the layer between a theater and a theater seat and you, and equally between a taxi driver that you would normally end up calling or walking down the street.
He has become the gatekeeper there and so Paytm is now essentially us. Look what the banks were doing. The money was always electronic in a bank and the bank was actually giving you cash at an ATM. He spent it again. Cash came back and went electronic again. on your smartphone, so the difference is seeing that instant growth, you said you can suddenly get to consumers that a model actually unbundles services and repackages them in a new way, a venture capital in actually digs into this and says I can build new markets so that last year in the US a billion dollar company was built every three days now some of them obviously died because inherently these models that are disruptive are also products basic in nature, essentially whoever uses the data best is likely to win, so they face intense competition, but we see that capital is designed to really open the gap and see that they can get market share vs. businesses physical and physical and this value will move to this layer that you know today no matter what happens if you continue to say shopping on Amazon and Flipkart a great brand you're getting the same number of pixels on that page as a small brand, so you're commoditizing the physical physical business and value is moving into the data layer and therefore capital is flowing into it and capital can see returns you can see the disruption you can see the headlines can't react and that's how values have been created so let me turn to you as the oldest startup in a young world.
I think my programs have been around some of that for 17 years if you look at that 17 year journey Ashish what it's been like and particularly since you also worked in the corporate world before that what have been the lessons learned for you and what is it like different to operate in this startup ecosystem so look at it from my perspective disruptive innovation for us a survival we don't sit like most traditional companies that have a steel plant that has a little bit of oil and don't know what to do twiddle their thumbs and they say ok now we have to think about disruptive innovation was survival for us because the barriers to entry in our business are very low capital is freely available for kids who are selling in a garage in pune they can start a business by renting a premises and suddenly tomorrow there is a business and you are always looking over your shoulder and, therefore, if you do not innovate, you die in the future. as far as our business is concerned because there are no barriers to entry in our business it's very pretty fast it's pretty simple as far as we are concerned the way we think about the market and I can talk about ourselves is India is three point six thousand millions of movie tickets sold annually, which is all of Africa, the Middle East, North America and Europe combined, and we are a movie-mad nation. not because to the untrained eye it looks like we are destitute paupers and we want to escape from reality and see women in translucent sari running around the trees and all that in our desperation we are a hot dusty country it is 40 degrees outside we have the maximum sunlight most indians are deficient in vitamin d i run book my own new zealand when the temperature hits 32 degrees i lose selling cinema tickets for sailing running golf and swimming in india always hot 9 or 10 months of the year why do you think south india sells more movie tickets because it is very hot all the time so in andhra pradesh and in tamil nadu and karnataka the biggest movie industries for us and so it is as we see it somehow. ody asked me who is your competition my competition is the ecosystem my competition the mindset of the indian consumer when i talk about the ecosystem everyone talks about this great universe that exists but its 1.2 billion indians 900 million mobile phones 300 million phones smart 150 million data connections 400 million bank accounts and of course this Paytm now to help us on this journey 22 million credit cards so what's really the timing?
So, start thinking about innovation, about disruption, about saying how do I grow the damn business, how do I do it? do this to book my show recently start a booking without paying which is a worked out model and you can pay up to an hour before the show the other thing we are working on is an algorithm to create a live credit score for the consumer based on your me my phone based on the area you live in based on your past performance your browsing history and your purchase history and then we give you a credit score and if we think you are likely to pay we give you a microloan in real time when you're booking a ticket and we let you choose to pay a month from now, so we're trying to get the unbanked guys closer to the guys we can get closer to and that's disruptive and innovative thinking or whatever, but it's just survival I mean we have to do it otherwise we're sunk looking at all of our five years from now or anyone else in this audience where else do you see opportunities with Mo is in India to capture that? our weeding because we are a capital constrained economy if there is one thing we should be doing is sharing I think fundamentally if you look at the Fair Wave model in India 200 million trips happen every day and our mission is to be a part of every single one of them and if you look like I said before if you look at each consumption they will be paid whether they are movies you know 3.6 billion tickets per day per year each consumption vertical is going to be revolutionized by this sharing model you know that in India the sharing economy will take a very different, you know, I like to believe that in India it will be more of the creation of these new paradigms that will happen from a very different dynamic than in the West, you know, the way I look at it is 200 million trips.
It happens one day that those trips are made on a bus that is so full that these people need different alternative modes of transportation. The local trains are very crowded so sharing will not be me sharing my private car with someone because people who own cars in India are just people on this dial with people in this room the average Indian doesn't own a car so that it will be more the creation of this consumption than the exchange of assets between different people, so that's the and in different industries, I think that will be the case, whether it's logistics, whether you know the infrastructure of a restaurant, what happens If how happy that a yeren man who is known for ambition or the goals he sets for himself and the team around him, which are fr insanely outrageous, the last or perhaps will surpass him even in this discussion is that he wishes put a Paytm wallet in at least almost half of all Indians in this country.
How do you get his team to really believe in this kind of aspiration? and not treat it as an outrageous fantasy. I think we will all agree that if notyou do something that's in the history books, what else did you waste your life on? I think it's a question. I think so when I talk to my team and we went through a challenge and the challenge is an existential challenge that we talked about in 2014 no one believed that we would be able to successfully do 100 thousand trades 100,000 trades and the room said there was a go Baker go home and he said it will be one way a million orders a day will happen here first that's our promise and that's our game we just write it on a wall so no one gets confused what our goal is and no one gets confused why we're chasing it and in those days just to put the context I RCTC used to be like the god of ecommerce six hundred thousand transactions and that was like a benchmark and I said this is it I can't put the timeline but I definitely know it will be the first one for cross 1 million in one day and surprisingly similar when we talk about that hundred million I remember the board meeting was going on again My meetings of the board are a very important movement in my life as you can guess now your board members also is that basically in the board meeting I have learned that you have to give a message so that you can get the assets and resources back, So I remember there was a growth of our wallets like 2 million 3 million 5 million and 10 million we were there at 13 million and point-point-point 100 million December 2016 and I wrote in the top pay TM will be the first hundred million product from indian users period that's all I didn't talk about the timeline in which it is written.
Amazingly, we did it in a year before we talked about December 16 and we had it on December 15. Total surprise, in fact, once you learn to defy gravity then there is no better fun. in defying gravity everything else really is so much and i think for the team once they learn how to do it next time they just want to know what's next can you believe that as a fundraising goal i mean someone came to pitch for let's say we'd like to put money into your company and I was like what's the presentation I should show you guys so I showed him some of my dashboard as you would expect and then I said okay I think you want to know the business so I'll show you. you the presentation that I gave a year ago to my fundraisi ng shocking for me were the numbers that we go three or four words were made in that first year and this is what I want to tell you once you are oblah destined for pain it is a fact, no matter every one of them go through the pain well and since you are going through the pain since the market will be tough since the resources will be fewer then why waste your time doing anything less than creating a story?
I guess I mean this is like one given that no one should waste their life on anything other than creating history. I think I have it clear, so they should direct you now. The good question is what you didn't see in Ola that made you invest in miru. The fact is data-driven business. create do two things: one, they create a platform that anyone can plug their big car into, a little plug, and secondly, they create network effects when you see that you essentially create markets where winner takes all and then the amount of capital being pumped in clearly leaves the incumbents, you know, catching up, so I think that's what happened even at Meru, which is now an 80-year-old business and they're going to have to clearly define their business model of differently now, but I'm saying what's going to happen to everyone in this room. if you have a business that doesn't depend on natural resources, whether it's oil and gas and something like that, or if you have an intellectual property of a specific product, remember that slowly this tsunami will come and hit you where you have to become a platform or become in a vendor in one so that's the big danger that's going on and I've seen it first hand in several businesses that I've invested in over the years that if you don't see it coming and it occurs to you that there is is this company?
I'm sure the banks will realize tomorrow that they had all the money on deposit electronically. All they didn't do was transfer it to my smartphone, which is what this man has done. You've built a data grid or m-data platform on top of data that was already there, so I think that's the big challenge here for all of us to start realizing that India is going to make the word jump here, but already has surpassed our consumers 200 million smartphones is the market for everyone so all of a sudden when the market gets so big how you deal with data becomes the most important thing and anyone has to think how many analysts they have in the teams the banks will fail against Paytm actually for the fact that you don't have data analysts there so I think that's the key to thinking about how you build your business model is fundamentally changing from now on in India. to get hit by this wave of companies that are young and leave Aashish here who are young and understand that data is the way to drive businesses create a winner take all platform And most importantly the big innovation that we will see that will transform our nation in the next 10 years, is all this Arthur, a platform that has emerged.
I think the fact that we'll have e KYC going we'll have our-work and everything will work on the smartphone, it's quite frankly creating a public platform for startups to drive value, so I think what we've seen so far is you know which has 100 million wallets, but there are already a billion people who are mobile ready, can use their Arthur card, can sign documents on phones in the next few years and suddenly we will find a different layer than any other country in the world, there is only one where information, identity, transaction, trust is available. as a public resource, so I think the transformation is about to take off, so I think we're seeing this little bump in initial investments. network two Risks are coming Payment platforms are coming UID is taking off Escrows will be much easier in the system by the time you have someone with the other card you can trust a transaction with him so it will be transformative , so I think the capital wall is actually about to start now Ashish my last question I'm going to address you because of the phenomenal success you've had on the book sure I mean the fact is I think you're organizing that you are orchestrating the t20 World Cup in India as we speak, how do you maintain balance and perspective in this world that has outrageous ambition?
Do they know exciting competitors and a market always hungry for more? They have blood in certain sprints, but it's a marathon and not in India. the business can be built in two or three years, then you think like an investor, you go in to go out as an entrepreneur, my pleasure in life is to look at a user experience gradually built on that and deliver value and valuation to the number of people please , it's a poor metric, it's a by-product, you'll never talk, hear us talk about our valuation, which by the way, it's not billions of rupees anymore, it's so much more, but we will, it's never going to be from us and you. you'll never hear us talk about the number of employees we have, it's a poor metric.
I keep telling my team what 300 the Greeks in the movie 300 what they were able to do and beat the Persians why do we need a thousand people or or? more and then it's a marathon and you have this balance I sell every weekend aggressively Kishore is my sailing partner we were supposed to go out tonight he is and I'm just applying the biryani and catering but you know what happens Every day you walk into work, be as excited on Monday mornings as you are on Friday nights, we have an anta class on Tuesdays at the office, we make bears and chips on Fridays on our terrace, so you know continue life the way it's because you know it's a 15 to 20 year journey and so it's going to have a positive impact so it's not about a sprint it's not about letting yourself down and not burning yourself out , just do it by waking up every day and gradually keep innovating.
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