60 Million Users and Counting – An interview with Varun Sridhar from Paytm Money

May 12, 2021

 

We had the pleasure of sitting down with Varun Sridhar, CEO of Paytm Money, India’s largest online investment and wealth management platform. Varun is an expert in leading financial institutions to digital transformation through intrapreneurship. Prior to Paytm Money, he served as CEO of FinShell India, where he helped launch PaySa, a mobile fintech platform. He was also with BNP Paribas and Deutsche Bank prior to that. 

The interview below has been summarized from an interview we had with Varun in our podcast, WealthTech Unwrapped

Ned (N): How are you doing, Varun? Thank you for joining us. 

Varun (V): Very good, thank you. Super excited to be here. And, you know, I’ve heard of you guys before so I’m very excited that I can add something. It’s a good day today, however, we’re going through some tough times in India. It’s been a challenging few weeks for everyone. But yeah, but I’m happy and safe personally.

N: Happy to hear you’re doing well. There’s a lot we want to cover, so let’s get started. I wonder, how does a corporate guy end up in one of the coolest jobs in FinTech? You’ve been at Deutsche Bank, BNP Paribas, big corporates. Was fintech something you always wanted to do or was it more happenstance that you ended up at Paytm Money?

V: So I think I’ll take a step back and maybe wind my life. I never imagined that I would be in a FinTech. If I go all the way back, I just wanted to be in a bank. I actually bought my first stock at 16. 

You know the reason I wanted to be a banker because my uncle invited me to a five-star hotel in Delhi, and said, “spend as much as you want today, and I’ll take care of the bill.” When a 16-year-old gets an opportunity like that, you think “hey, I want to make a lot of money too”. After graduating in commerce, I was chartered in accountancy and then somehow went into politics. 

I ended up contesting elections at Delhi University, which was a very serious election, and I ended up winning, making me the new president. That’s when I realised that life’s difficult; sometimes it’s just good to make your own decisions and create your own path. After that, I became a salesperson. My first banking job was actually a salesperson on the ground for Citibank, selling credit cards, personal loans, etc. Nothing fancy. I then went on to do jobs in the evening, which is when Deutsche Bank happened. That was my first experience of a startup, as a very early employee I was trying to do zero to one in India. And so my career started going in that direction and then I went on to join BNP Paribas where I did a zero to one in Egypt for them. Then I did zero to one Europe with the bank called Hello Bank. 

Now back in 2015 I met this guy in San Francisco who said you know, the world that you’re in is going to change and flip you on your head. And the change was about technology. I was already a banker but I was so behind in tech. I didn’t really understand it. So in 2015, I came back to India to buy a company called Fedcon which eventually became a FinTech. 

As you can see, I think the biggest shifts that I’ve seen in my career have been when I just believed in myself and took big steps. I failed a bunch of times, but eventually, once you figure out what you like, and what keeps you happy and keeps you going, you run harder and faster towards it.

N: Wow, what a journey. I love that you say Deutsche was a startup. I don’t know if Deutsche would agree. But if you saw it like that, it was probably more fun to work for because you felt like you were really building it, right? 

V: Absolutely. And I think, the word startup today means you get something going from an idea in your mind over a coffee shop or a garage, and you make it into a company. But actually, I’ve been doing intrapreneurship jobs in very large companies, essentially startups within a company. Deutsche Bank was a large bank back then and still is, but they were just starting to get their foot in retail in India. And a similar thing happened to me with BNP Paribas, when they came to India, it was the first big retail operation across the Asia Pacific. The fact that I could carry that flag and be the first one to put them on planet India, was a great responsibility. It made me realise I have to be okay with the risk. And I think that’s where most people take a step back. I also learned that it’s okay to learn to swim with a life jacket on. A life jacket will not ensure your survival in the ocean, but it will allow you to have fun and feel the waves.

N: I think it’s that, you have got to take that bit of risk. And I think you’re right, you summed up how you came with Paytm: you’re willing to take those risks. And so how or when did you come to make the decision to join Paytm Money? Was it something that you just knew was coming? How quickly did you make that decision? 

V: So I’m a 32-second decision-maker. And it’s kind of funny because I left BNP Paribas in a similar way. I was running a startup for them to launch a lending company in India, and somebody called me from Paris and said, “Varun, we love you. But this company is not going to go live” – even though we were 60 days from launch. And therefore I said, okay, I’m resigning right now, on the phone. 

I left BNP and actually sold that company which really was my true first personal sale. I later left that company after a year and two months because as we started to come very close to breaking even, the independence that I was seeking on a personal level was missing again. That’s when Paytm called. In that call, all I said was, “Hey, I don’t want just a job anymore. As long as this is my company and you can give me something, I’m okay.” And everything else was discussed later. It was a 32-second decision.

N: I’m realizing you’re not a corporate guy at all. You’ve been an entrepreneur, a hustler, a risk-taking guy right from the beginning, it seems you had that DNA, right? Because that’s what makes it perfect. It sounds like your DNA is that startup entrepreneur, a risk-taking guy from the time you bought the first stock at 16.

V: Absolutely. You know, that’s the fun part. At 16, you do what your parents tell you, at 21 you do what your society tells you, at 25 or doing something that your friends, close family or close-knit circle tells you. But I think somewhere after that you realise that you have to do your own thing. 

N: Let’s take a look at Paytm Money. I heard you mention in another interview about this concept of 360-degree wealth management platform. What do you mean by that? 

V: I think I’m going to take a step back. Users or people in general, anywhere in the world, look for habits at the end of the day. How do you achieve happiness? You can be happy in multiple ways but I could broadly split it into three main areas. I think there’s money, life, and health. I can’t work on your relationships, life or on your health directly, but I can help you with money. I can help you make money as a means to habits.

In a developing country like India, we’ve noticed it’s a very middle class-driven economy. A lot of people have dreams and hopes and want to save and create wealth. Even though they have cash flows, they don’t necessarily have a lot of wealth built up. You may have a young person making a fair amount of money. I can use myself as an example. I come from a very low middle-class family, and my wealth was very, very small. However, my cash flows were very high. People like me work hard for 20-30 years to create what we would call wealth. But then, once you’ve created wealth, there’s an important gap. How do you manage your money? How do you take care of it? And different people, in a large company like India, have very different needs. You have different customer segments and preferences. 

Now to put all this together on a simple platform, for 400 million Indians was the reason why Paytm Money came to me. The goal was to help 100 million Indians meaningfully manage their wealth. To do that, you essentially have to give 360 degrees solutions. 

So for example, there’s a young person who’s 22, from a decent family, well educated, who may not have wealth but has decent cash flow, and has a very high-risk appetite. So they would want to go into a very lucrative market. On the other side, you have a 45-year-olds, who already has a family and has some wealth built up after 20 years of hard work, and let’s say that’s around $30- $40K. But for him or her, that’s enough. They just want to protect that money. And they’ve understood that a bank fixed deposit is the only way to do so because at least you know that your capital is protected, and it’s easy given they don’t have the time to manage it. So for that person, I need to have a fixed deposit option on my platform. 

Because we cater to a wide variety of people, we’ve made our vision to be India’s number one digital wealth management platform. And if we do that, essentially, what we’re saying is whatever wealth you have, be it one rupee or a few hundred, thousands or even millions of dollars, our platform is the one place where you will get everything done, irrespective of your risk appetite and product.

N: That makes complete sense. It’d be crazy to think that there would be a one size fits all solution because people have such different needs. So Paytm currently has 7 Million users in India which is incredible, but there is still plenty of room to grow. You’re part of the Indian growth story now; Paytm isn’t just an application in India, it’s part of India, it’s part of everybody’s DNA. So how does growth play out?

V: As long as you’re an honest, transparent, simple company, which we think we are and we’re very proud of that, you can use transformation for good and continue to grow. Success can take time but eventually, you’ll start seeing it play out and even reach other businesses. India is changing. I believe that all the hard work from regulators, companies like us, the infrastructure, in general, will result in a new India. We will see a major transformation from 2020 to 2030 in India. While Covid has been terrible in many ways, it’s also pushing for more digital transformation and accelerating that process in India. 

N: I keep coming back to this desire I had 30 years ago. I spent a year travelling from the Himalayas, to the deserts, up to Registan, and Kerala and everything in between and what I saw was beautiful emerging countries, but with huge disparity. And I remember thinking back then, it’s very hard for somebody who might be unfortunate to be at the lower end of the socioeconomic ladder to move up. So in a way, Paytm is that ladder. People talk about financial inclusion, which is easy to say but incredibly hard to achieve. In many countries, if you have $10, no one wants to talk to you, because you don’t make money on just financial advice. But if you have $10, you need the most advice, because you can grow it. You are literally providing a ladder for people in all parts of India. So from where you are today, is it right to say that at some point, Paytm will be almost the de facto, financial centre of most people’s lives? Is it already?  

V: I think so, yes. You said it very well. Paytm today has 590 million registered users. We’re constantly asking ourselves, how can we do investments right? It doesn’t matter if you have $1 dollar or 2 billion dollars; I have customers that have $5-6 million in assets on their mobile phone. 

We are basically telling our users that once you are a Paytm user, we take care of your loans, we take care of your wealth, we’ll take care of your payments, we’ll take care of your simple internet uses, we take care of your tickets, we’ll take care of your travel, we’ll take care of almost everything. The fact is that we’re able to do that and we’re able to do that on a large scale. Ultimately, users start to then see that there are benefits in doing all this together, in one place. That’s the super app story. 

N: Everybody wants a better financial future. That’s one thing we can all agree on. But wealth is confusing. Even though it should be simple and accessible. How do you make that happen?

V: The biggest problem is making it simple. And the second problem is booking trust. When you’re asking somebody to put money in your products or platforms the single biggest thing to not do is to destroy trust.

I can give you a practical example. A few years ago we launched Paytm Digital Gold. Keep in mind that in India at some point, everybody has been told that gold is the way to save a life. They’ve been taught that if you invest in gold, it will come through. So we thought, why don’t we digitize that experience? 

Many people laughed at us at the beginning, saying, “Hey who’s going to buy digital gold on an app, the fun of buying gold is it’s a piece of duality. You can wear it for a wedding, and you can show off that you’re wealthy because it’s proof that you have money.” Which to a certain extent is kinda true. When you’re older, it’s kind of social proof. So how would you do social proofing on an app? We believed that maybe there were users who didn’t want to just wear their jewellery, but rather they wanted to keep it as savings. Our concept was around the idea that if we can start allowing people to buy digital gold at one rupee or offer pure 24 karat gold. So that people wouldn’t have to worry about selling the real thing and we give them real-time prices. As you know the price of gold changes every 30 seconds so we wanted to find a way to give users real-time prices so that they could decide transparently. We would reduce user commissions to zero and take a commission from the manufacturer instead. We put all this into a mobile application and launched it. Since the launch, everybody has used the app, even people who had never bought gold before. It’s been two and a half years, almost three, since the launch and we’ve seen big success. 6000 kilos of copper, 62 million consumers, out of which I would say maybe 2 million have made gold an important hedging savings instrument and they’ve understood the whole concept.

One day I was sitting looking at my dashboard and noticed this user buying rupees gold at 2 am in morning. Which I thought was curious. I looked at his account, and he had been doing it every day, for the last maybe 200 days. I actually ended up calling the user the next day and I learned that he was a driver who drives an auto-rickshaw in India. He told me that buying gold was the only way he could put something into savings at the end of his workday. And that’s just one user. On the other end of the spectrum, I have a user who moves $30,000 into the product every time the price drops by 5%. So you have these two users with the same interface. I think that’s the simplicity that we’ve been able to bring in, obviously, with the help of a lot of people and an ecosystem that allows for this diversity. 

N: Wow, I love that story. So let me ask you this Varun if there’s one thing that you can change about the industry in general, what would it be?

V: More often than not regulators are senior finance ministry people, very important CEOs who keep asking us at Paytm, “tell us what is the one thing I can change for you so that we can go from having 50-60 million users in India and capital markets to 500 million?” What is the one thing they could do? I think the one thing is fairly straightforward and simple. There needs to be an ecosystem for people with less than $100 dollars. Today a $100 customer goes through the same KYC, the same compliance, the same product complexity, the same rules, and the same expense ratios that a customer with $10 million, $2 million, or $5 million dollars goes through.

We’ve been fighting, contesting and requesting innovation. The day India will change is the day where you can buy a burger or call an Uber ride using a mutual fund. That’s the day where innovation will truly come. 

Now for that to happen, there needs to be a one-click process to buying a mutual fund. But today, that doesn’t exist. The process is the same for everybody. And that’s perfectly fine from a regulatory point of view, but not innovation. So I think when the industry regulator technology move the dial if you have $100 you can get started right away; that’s what changes the game.

N: It should be simple. But it’s complex, right? I think that’s the kind of duality of money. In theory, you’d make money, try to spend less and save more. But the rules are definitely challenging. And I think it’s great to see what Paytm is doing. I did want to ask real quick, obviously, the situation with COVID and India presents truly challenging times for the whole population. How does Paytm plan to address this? From a digital standpoint, there are positives to take away from these difficult times. Do you have a positive long term outlook?

V: To touch upon the short term things we’re doing it’s important to understand how we think of India. You know, one of the things we think of in India is at 5 million users, India depends on us and that makes us make sure that we do the most we can to help Indian life. 

Imagine if Paytm was to stop for a minute. What would happen to 250 million Indians who are trying to make transactions on that specific day? We have to realise that we are who we are because of our society and that society and the country as a whole today is going through a tough time. So we said, “okay, forget everything else, let’s get oxygen across India.” And so we’ve done in this massive campaign, putting all our energy into it. The kind of impact we were able to have in 72 hours was fantastic. And the number of lives we’ve been able to save just phenomenal. 

Then our extended network of employees plus partners, plus people on the ground including about 10 million active merchants; anybody in our merchant fraternity or retail fraternity who’s in trouble we want to be able to help. We have a team who has been working really hard, working overtime to have a full medical centre set up. We have SOS centres set up to coordinate across India. All of this has been put in place at a record time and that’s what I love about working in Paytm. At the end of the day, if our merchants, our consumers don’t succeed, we will not succeed. So that’s something we’ve done in the short term. 

In the long term, I think, the India story is very intact. Our belief is that COVID has led to three realisations. The first realisation is that technology can really, really convert and break existing inefficiencies, bringing in a lot of new ideas. As we said, the starting point is trust and over the years you see quite a number of people taking chances through technology, which is a big change. 

The second realisation is from the regulators, the government, what I would call the conventional stakeholders who want a lot of wealth, power, and influence. Larger companies and other government stakeholders have now realised that they need to promote this technological shift and a new wave of startups in India. They need to promote R&D. So the regulatory change on that side is immense. Now it takes time to trickle down and some people will criticize the government, but I do see that everybody’s bringing in fundamental change and these changes will take five to seven years to come into full effect. This will ensure the right ecosystem is being created. 

And I think the third and the last change is witness crisis. We’ve understood that some infrastructure investments are necessary like health data. Health was not at the top of India’s agenda prior to the pandemic. Post-Covid, it’s a different story. Although right now the country is suffering, I do think that in the next 10 years we will see a big shift in health management and that pivot is happening now. 

N: That’s great to hear that Paytm is taking both short term and long term steps. Well, thank you so much, Varun for joining us today. It’s been great to have you! 

V: Thank you. It’s been fantastic.