“Startup” is the buzzword of the current times. In India, the ecosystem has grown at a phenomenal rate over the last half a decade. With about $5 billion worth investment in 2015 and three to four startups emerging every day, India has paved its way to secure the third position in the world in terms of the number of startups (4200 and counting), an expected growth of 40%, by the end of 2015, reports NASSCOM.
Of late, more and more people are ‘taking the road not taken’, and are willing to go ahead and experiment with their ideas. Kunal Shah, CEO and Founder of Freecharge has had one such enticing journey. Like every founder, he too faced several challenges but his never dying spirit kept him going despite all odds.
Freecharge was founded in 2010 with an aim to get the recharge industry online. It got acquired by Snapdeal in April 2015 for an estimated amount of $400 million.
iamwire got in touch with Shah to explore deeper into his journey, challenges, getting acquired by Snapdeal and advice for budding entrepreneurs. Read ahead to know what he said.
What all hurdles did you face when you started FreeCharge from scratch?
Startup journeys are bumpy, and the next roadblock is never far away. Like any other entrepreneur, I too faced several challenges. One of the challenges we faced germinated from the widespread perception in the venture capital industry that recharge is a bad business because of low margins and supplier concentration. It seemed difficult to start a new firm in an industry where the idea of your propositions isn’t respected. Another hurdle we encountered was finding good talent to grow our team. The technology platform was built in a hurry and our users were experiencing failed transactions as we tried to grow faster. However, we sailed through this hurdle too. We moved to Bangalore and it helped us strengthen our technology team as well as expand our employee base across all departments. In January 2014, when the company launched its new mobile app, it accounted for barely 10% of all transactions. This was anything but motivating. But with passing time, in 2014 itself, the transactions grew almost 50 times! This boosted the team with immense confidence and pride.
Slowly and steadily, FreeCharge became No. 1 shopping app on Google Play, at least temporarily. Our TV campaign also helped give a boost to our app ranking and soon we got the top spot within weeks of launching the campaign. All of this put together helped everyone understand that recharge has significant potential to acquire online transacting customers fast and as a business it is here to stay for long. The satisfaction to bring about a change in perception of the industry pushed us to perform better.
And what was your biggest learning while overcoming starting up hurdles?
My biggest learning is that you should have a ‘never say die’ spirit. That is the crux of entrepreneurship. I don’t think talent or smartness can make you successful. It is the ability to strive and survive every day that makes an entrepreneur. This attitude helped me overcome the hurdles and challenges that I faced. Every single time a transaction failed, it changed me as an entrepreneur. Relentlessly pursuing perfection made me a different person, stronger and determined. Talking constantly to customers and receiving their feedback helped me develop a better product.
There are millions and millions of people depending and believing in an entrepreneur. And that is my motivation every day. Every day, I want to do better than my previous day’s achievement. I always feel that money has to be a by-product. I believe if you chase perfection, money will follow. We were lucky to have a very collaborative board dynamic, and an investor base that was always very supportive. It is the strong trust and relationships that allowed us to overcome many obstacles and get to a great outcome.
You mentioned, Sequoia has always been your best support till now. How exactly has it been your strong side for scaling up?
I firmly believed in our lead investor Sequoia and was always confident that it was a good decision on our part in all our rounds of investments. Sequoia has been an extremely helpful and an integral part of our success. All deals between us have been transparent and clear, without any game playing or hedging. We have a relationship where the short-term economic agenda does not matter, everyone is singularly focused on winning.
One of the biggest challenge we faced was attracting talent in Mumbai. It was probably one of the worst periods for us as a business but with the support, motivation and comfort provided by Sequoia we got through it and came out strong. I still remember what Shailendra said to me at that point: “Don’t worry about the fuel; just focus on getting the plane off the ground.” For a founder, someone showing faith in you during rough times becomes the biggest motivation. We share a relationship of mutual trust, where personal ego and economic agenda have never come in our way. I consider us as one seamless unit and that has been extremely helpful to me as an entrepreneur.
How do you feel about having a common investor for both Snapdeal and Paytm?
We are indifferent to this. Their investment in any other company does not affect the relationship we have with them. We have full faith and trust in our investors. I know people will find it hard to believe, but in the years that we worked together, there was never a difficult negotiation among us.
Do you feel that in these last 5 years starting up has become easier? Or because of the competition has scaling up become tougher?
Today, it’s easier to start your own business and be your own boss than any other time in our history. As a society and ecosystem, we are letting go off our fear of stepping out of our comfort zone and fear of failure. A generation ago, entrepreneurship was an alternative lifestyle for people who just didn’t fit into the corporate model, for the square pegs that couldn’t fit in round holes. We are in a time, where people are much more confident, empowered and are making their mark without the security blanket of an employer. As opposed to the popular belief that experience makes for a good leader, with the start-up culture booming, young leaders are writing new rulebooks.
Prime Minister Modi’s initiative, ‘Start-Up India, Stand up India’, has also encouraged entrepreneurship among the youth of India. It is a big step towards increasing job opportunities and revolutionising the economy of India and will help India progress towards development. The government needs to focus on penetrating authority to the lower levels and spreading awareness at the grass root level to motivate and encourage people to take a chance and show their innovative and novel ideas to the world. As one of the leading start-ups in the m-commerce sector, I feel that another important aspect that the government should focus on is digitising the rural areas and making people realise the power of being digitally connected and understand the true potential of m-commerce and e-commerce.
FreeCharge was growing rapidly on its own, yet you chose to merge with Snapdeal. Why so?
We hold pride in saying that we are the largest mobile commerce entity in India after the acquisition with Snapdeal. FreeCharge has established an innovative channel to make the mundane payments invisible. We chose to merge with Snapdeal for expansion and growth purposes and it has definitely fueled our development. Consumers need a platform they can trust with their money, convenience and experience a seamless transaction. At FreeCharge, we provide them a simple platform which is easy, safe and convenient for recharge and utility bill payments. The vision is to make online payments and transactions’ experience rewarding and frictionless. With 87 million combined registered users between Snapdeal and FreeCharge, 8.2 million daily unique visitors, 4 million engaged hours, 15 million stored cards, combined with Snapdeal’s GMV of $4 billion, FreeCharge is set to become a dominant player in the m-commerce industry.
What do you think the future holds for upcoming eCommerce startups?
People are adopting online transactions for the convenience and quick nature of process. The market space is still very fragmented in terms of consumer adoption and acceptance towards online/ mobile recharge. India is the second largest mobile market in the world. The mobile penetration in the country is close to 72%, and nearly 95% of mobile subscribers use prepaid recharge plans. Thus, the scope in the market is huge therefore all the companies providing online/ mobile recharge service have tremendous opportunities.
FreeCharge, enjoys the monopoly in the space with strong focus on being one stop shop of Mobile Recharge, DTH, Bill & utility payments with 30 million registered users. The story of online recharge and couponing business in India is led by FreeCharge with 90% of transactions happening on mobile app. The industry has a lot of players mushrooming on an everyday basis but customer retention is only possible with players that they can trust. We have sensed that the industry has immense potential for evolution of m-commerce leading to more and more entrants each day.
What key areas should entrepreneurs focus on, for scaling up?
Currently startups in our country are small in size; there is a huge scope for startups to grow in India. Whether you are a B2B or B2C focused company, the key is to be customer centric and offer the best of services as per customer requirement. Expertise, marketing knowledge, supply chain management and people skills are essential for any young entrepreneur looking to start his/her own venture. Another important requirement is to be innovative, think out of the box and do your own thing rather than replicating another existing model. Until your idea is different, it would not attract any interest. Lastly, it is vital to change one’s business model with changing times and market shifts.